Amazon's CDN message: Commoditization on deck

Amazon's CDN message: Commoditization on deck

Summary: Amazon Web Services touts its CDN customer base. The real message: The CDN is being commoditized in a hurry.

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TOPICS: Amazon, CXO
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Amazon said it has 20,000 CloudFront content delivery network customers (CDN) and now is among the largest vendors in the neighborhood that includes Akamai and Limelight among others.

In a post, Amazon said that CloudFront is the largest CDN. Dan Rayburn rightly questions the figures and says there are other moving parts to consider before making that call. Rayburn, who knows the CDN industry cold, writes:

If the majority of Amazon's customers are start-ups, or developers, then the average revenue per user (ARPU) is probably a few hundred dollars a month, with many paying even less than that. And since Amazon does not require monthly commits, a customer could be here today, but gone next month which means their business would have a very high rate of churn. Amazon did define in their post that the 20,000 "active" customers means that the customer "has used CloudFront in the given month," but we still don't know what kind of volume the average customer is doing or even what percentage of their customers come from which verticals.

Rayburn has a lot of other items worth checking out. Overall, Amazon needs to cough up more data before it can really thump its CDN chest.

My takeaway to this Amazon post is relatively simple: The CDN business is going to commodity-ville at a rapid clip. For those covering the industry, CDN commoditization isn't a new development. Akamai is moving upstream and launching new services. Other CDN services are being offered by telecom giants. CDN services just aren't a differentiator anymore. Even Google is getting into the CDN game.

If there's any message here it's this: Amazon can take its active customer count, grow it and pressure the CDN industry. All it needs is a few big media companies---which are mostly loyal to Akamai to deliver their pages and video---to go the Amazon route to commoditize the industry more.

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Topics: Amazon, CXO

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4 comments
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  • Wait... what - Canadians are being commoditised?

    I knew the world loves us - but come ON now...
    TheWerewolf
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  • RE: Amazon's CDN message: Commoditization on deck

    Larry - yes, commoditization poses a challenge to CDN providers, [i]especially[/i] those for whom price is their only differentiator. But it remains very possible for CDNs to set themselves apart with superior performance (not that CloudFront's performance is hard to beat), value-add services, and acceleration of non-static content (i.e. app acceleration.)

    And we CDNs [I work at EdgeCast] should be helping customers by providing real business cases - from real customers - to show how content delivery (and, by extension, a better user experience) protects their brand and improves the bottom line...
    acitrano