Juniper To Refocus Their CDN Efforts, Drops BitGravity’s CDN Technology

Over the past few weeks, I’d been hearing a lot of rumors that Juniper was planning to exit the CDN business. As you may recall, Juniper entered the content delivery game in early 2010 when it acquired Ankeena and the technology became Juniper’s Media Flow portfolio. In a call with the company last week, Juniper said they are not exiting the business, but are changing their focus and are dropping BitGravity’s CDN technology that they licensed earlier in the year.

While Juniper gets lumped into those who offer CDN services, like other vendors, Juniper develops and delivers gear that customers use to deliver content more efficiently. In the case of Juniper, its Media Flow delivery products could be used within a CDN, within a managed video delivery network, or it could be used for transparent caching, depending on which customer we’re talking about.

Juniper made it clear to me that its Media Flow products aren’t going anywhere. It will still deliver the fundamental caching and content delivery products that are the core of its Media Flow portfolio, for customers to use as transparent caches, for multi-screen delivery or even CDNs and will continue to work with its ecosystem partners who are solution providers and offer solutions in this space. But the company will be making some changes with regards to where they focus their efforts on CDN products going forward.

The company said they came to the decision that building a complete CDN solution didn’t make a lot of sense for a company like Juniper, so instead they are focusing their efforts on their strengths: the core Media Flow content delivery and caching engine. This will be the focus for the company and they will continue to invest, develop, enhance and sell the solution. The service management technology acquired from BitGravity, and some other CDN-related technology projects that were underway will no longer be a focus for the company.

What this means for customers is that they can continue to buy Juniper’s Media Flow products just as they were doing today. But if you were holding out for Juniper’s end-to-end CDN solution with service management, you are out of luck—but for everyone else its business as usual.

To me, I don’t see this change in strategy as a negative for Juniper. Very few vendors truly have an end-to-end solution, for any service, and having a focused product strategy is a big key to being successful. Juniper’s approach is to focus on edge services and caching, which are very important pieces needed for what’s taking place with regards to content delivery in the last-mile.

When It Comes To CDN, What Is Value Add Services and What Isn’t?

The term “value add services” is used a lot by content delivery networks to describe services that don’t fall under the typical commodity CDN business. It’s hard to define exactly what those services are as most CDN vendors don’t define it down to a product level. I get many questions asking what services are classified as value add, but the answer all depends on who you ask. The way I define it for people is that CDN services typically include four kinds of content delivery. Those are – audio/video streaming, audio/video downloads, software downloads and small object delivery.

Services outside of those would be considered value add and would include things like, application acceleration, dynamic site acceleration, front-end optimization, mobile content acceleration, media management (transcoding, ad insertion, content protection) and a host of other services for the purpose of security and commerce. That said, many of those value add services also utilize the CDN’s network to deliver this content, so not everything that falls under CDN can be that easily quantified as value add versus non-value add.

Each CDN vendor looks at and defines their services differently and many confuse the industry even more when they break out their revenue under the generic term of “value add services”, but then don’t define what those services are. Akamai in particular confuses the market because they break out part of their revenue based on services (products), while the other half is broken out by media and entertainment, which is not a product or service, but rather a vertical. All of this aside, here are what I consider to be the most common services that would fall under the term “value add services”, the way I define it, and definitions on what those services are.

  • Dynamic Site Acceleration (DSA): Dynamic site acceleration is a suite of technologies and products that deals with optimizing dynamically served content across the network. Traditional DSA services often include TCP optimization, route optimization, connection management, on-the-fly compression, SSL offload and pre-fetching technologies.
  • Front-End Optimization (FEO): Front-end optimization technologies help to reduce the number of page resources required to download a given page and makes the browser process the page faster. FEO technology isn’t used to bring content closer, but rather makes the content itself faster by optimizing the client side delivery of website resources.
  • Transparent Caching: Transparent caching platforms make intelligent decisions about which content can and should be cached inside a carrier’s network. By deploying intelligent caches strategically throughout their networks, operators can cache and deliver popular content close to subscribers and reduce the amount of transit traffic across their networks.
  • Licensed/Managed CDN: Licensed and managed CDN refers to software and services aimed at helping telcos, carriers and service providers build and deploy their own CDN services inside their network. Licensed CDN refers to the licensing of CDN software to the carrier who then builds a CDN solution on their own. Managed CDN is when a service based content delivery vendor helps build and manage the CDN component of the carrier’s network for them.
  • Application Acceleration: Application acceleration is a suite of technologies that combines fast packet processing with SSL acceleration, connection multiplexing, dynamic caching and adaptive compression to improve application response times. These technologies enable enterprise customers to accelerate the delivery of internal, external and latency sensitive applications to distributed users across the Internet or via their enterprise network.
  • Mobile Content Acceleration: Mobile content acceleration technologies are designed to specifically eliminate latencies found on mobile broadband networks to reduce page load times on mobile devices.

In addition to these listed, you also have a whole host of different services to handle things like DoS attacks (security), custom and managed DNS, custom reporting, tracking and analytics (especially for ad delivery) and lots of pieces in the video ecosystem for managing and adding business rules around the monetization of video. This is how I would classify value add services, but others may define it differently. How you would define it?

Akamai Said To Be Guaranteeing AT&T $100M In CDN Reseller Deal

At the end of last week, and over the weekend, multiple people from the industry were sharing with me what they know about the negotiations between Akamai and Limelight, who are both competing for a CDN reseller contract with AT&T. Everyone I spoke with said they expect Akamai to win the contract and all of them also said that as part of their proposal, Akamai is guaranteeing AT&T at least $100M in revenue, over a multi-year deal. Some people told me the deal size was $100M and others said it was “more than” $100M, but either way, it sounds like Akamai has put forth the best revenue numbers.

While $100M may sound like a lot of sales, when it is spaced out over a couple of years, it’s really not that much revenue for AT&T. But I’m also hearing that Limelight was only willing to guarantee half as much revenue to AT&T, between $40-$50M, which if true, it’s probably one of the reasons why everyone I speak to keeps saying Akamai will win the deal. Of course, until a contract is signed, none of this is official and we still need to see AT&T execute on this new strategy. Companies put a lot of ideas and plans on paper, without following through with them, but from everything I am hearing, it sounds as if AT&T is looking to wrap this up pretty soon and sign a contract with Akamai or Limelight.

AT&T In Talks To Re-Sell Akamai or Limelight’s Enterprise CDN Services

After many years of AT&T (T) trying to sell their own CDN services into the enterprise, multiple sources tell me that AT&T has decided that it makes more sense for them to simply re-sell CDN services from either Akamai (AKAM) or Limelight (LLNW). Both vendors are currently in negotiations with AT&T bidding on the business and while AT&T has not yet picked a winner, I’m hearing that even though Limelight had been favored to win the deal, the reseller business is now Akamai’s to lose.

No deal has yet to be finalized and considering this involves AT&T, who doesn’t have a track record of moving quickly, we’ll have to wait and see if they execute on this plan. From the details I have, Limelight has put forth a better offer business wise but AT&T has more confidence in Akamai’s ability to sell into the enterprise market. While Akamai does have the advantage there, the downside is that AT&T will run into a lot of channel conflicts with Akamai since a very large percentage of enterprise customers are already taking services from Akamai. AT&T would have less channel conflict re-selling Limelight’s CDN services, but to date, Limelight hasn’t had a lot of success in growing their enterprise business.

I’m told that as part of this contract with AT&T, the winning vendor would take on some of AT&T’s employees from their digital media group, so Akamai or Limelight would stand to gain some additional headcount with the contract. While many would be quick to assume that a re-seller contract with AT&T would generate a lot of revenue for Akamai or Limelight, it won’t. At least not in the near term. Last year, AT&T did a total of $10M in CDN revenue and right now, no telco is killing it when it comes to selling their own CDN services, or re-selling those from a third-party. There is a good opportunity to grow the CDN business over time, but it’s over many years and it won’t amount to a large amount of revenue for either Akamai or Limelight over the next 24 months.

While many are familiar with the multi-year contract that AT&T already has in place with EdgeCast, that should not be impacted if AT&T goes through with this new strategy. AT&T has always been using EdgeCast’s licensed CDN platform for their wholesale CDN services and federation model, so I would expect AT&T would still manage this portion of their CDN business. Customers who are currently buying this solution from AT&T purchase it from a wholesale division of the company, not from an enterprise sales team, so a new re-seller deal with Akamai or Limelight should not impact AT&T’s wholesale CDN business, which continues to grow. We don’t know exactly how much traffic AT&T is pushing for this portion of their business, but earlier in the year EdgeCast did say that combined, “multiple operators” are “already pushing tens of Gbps via the CDN federation”. So it sounds like any CDN business already running across EdgeCast, wholesale or not, would not see any disruption.

While enterprise customers could also go direct to Akamai, most of AT&T’s large enterprise contracts are for multiple products, including things like co-location, transit and managed services, which are services Akamai does not offer. So AT&T isn’t trying to get CDN only business with a re-seller deal like this, but rather want to use CDN to keep or get them more of the non-CDN business they already have.

We’ll have to wait and see exactly which CDN vendor AT&T teams up, if they follow through on this new strategy, and how long it would take them to execute such a plan. But it seems pretty clear now that AT&T has finally made the decision not operate their own CDN outside of the wholesale business and that by re-selling Akamai or Limelight, it will give them access to a bigger section of content delivery products and a bigger piece of the pie.

Updated: I did not contact any company mentioned in this post asking for them to comment as I know none of them would have been able to talk about a potential pending deal.