Content Delivery Networks (CDNs) #3
I have written a fair amount about CDNs here, here as well as a post specific to over the top (OTT) video here. Last week it was with some degree of skepticism that I read this article in Bloomberg about AKAM being an M&A target of IBM or Verizon. I know nothing about that speculation. What I do know is a lot about service provider networks, CDNs, networking technology and how content is moved around the internet.
Starting with the premise that it “…may finally be cheap enough…” thesis regarding companies. I have objected to this notion in the past as a lazy thesis on equity prices. I do not understand why people really think if a stock price declines, then suddenly some other company is going to jump in and buy it because now it is cheap. The stock price declined for a reason. Ask the team at HPQ how well that PALM deal worked out after they waited for the stock price to decline.
The next flaw in the article is the notion that website acceleration and video consumption is one and the same. As I have pointed out, this is a lazy thesis in which a detailed understanding of how content is provisioned, distributed and consumed is missing from the quote. This is called context. People often confuse the initial technology solution provided by AKAM, which was an extremely intelligent and clever idea, with “bandwidth explosion” as quoted in the article.
When I hear grand standing comments such as “bandwidth explosion” without some form of statistical reference I just ignore it. The initial solution that Akamai provided had more to do with providing distributed (i.e. localized) HTML content and querying for content from uncongested sources via alternative routes than exploding internet bandwidth usage, video, the internet will collapse, blah, blah. The argument can be made that if the internet worked well enough, meaning that service providers provisioned high capacity service to local users and removed over subscription ratios in the hierarchy of the internet structure, thus flattening the network structure, then there would be little need for a distributed CDN as actual service providers or content providers (e.g. AAPL, GOOG, MSFT, YHOO, AMZN) would easily deploy this capability with little need for third party CDNs. That is one of the reasons why we have seen the rise of centralized CDNs (e.g. Limelight) and software companies like PeerApp. It is also the reason why we see a rise in SSDs, flash and the ability to deploy huge amounts of storage in the network.
Let us all keep grounded in reality. Akamai is a tremendous company and they have extremely valuable intellectual property. The network is changing and that is why I think AKAM would want to be acquiring companies. They need new solutions and technologies that address how the internet is changing as their legacy solutions become less relevant.
* It is all about the network stupid, because it is all about compute. *
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