Tuesday, August 17, 2010

CDNs - the rise of the anticloud

I was at a meeting with Akamai the other day. Akamai is a very fascinating company and i have followed both their business and technology progress quite closely. in fact, I have made money on their stock. Akamai has been delivering services in the Cloud business model for longer than the term Cloud has been in existence. In a strange way, though, I consider them anticloud. They are a force driving decentralization of content while Cloud is the force of centralization of both content and processing. In many ways Akamai is stretching the boundaries of the Cloud to the edges and in an extreme situation right to the home. This extreme situation is when CDNs merge with P2P technologies to deliver content from the end points themselves. Now, if anybody thinks this is hypothetical and fantasy then, look at Red Swoosh acquisition by Akamai. What P2P lacks, arguably, is the content management sophistication of traditional CDNs but companies like Akamai see no reason why the management cannot be extended to a content delivery node sitting on any of home network devices viz., wifi router, broadband router, set-top box etc.

In principle, this may allow some users to become data center providers for their community where the service is delivered by Akamai through its partners but the real estate is rented from end-users who make the capital investment into buying bigger network devices.

The forces pushing the content to the edges are not new - network congestion which gets exacerbated by rise of video. Today's digital video is not your father's video content. It is much bigger in resolution, higher in frame rates, interactive, 3D etc. All these factors demand data capacity of unprecedented levels. A 4K video (which you can upload on youtube now and is actually a resolution of 4096x3072) will not take a lot of simultaneous viewers to clog the internet backbone. Through the history of the internet, the last mile has been the bottleneck but with the advent of video the rate limiting characteristic of the last mile is preventing the meltdown of the internet. Thank god, we don't have all the internet users on broadband !! It is easy for people who have seen Indian cities transform in last 10 years to relate with this. The prosperity has resulted in explosion of car ownership but the roads have failed to keep pace and result is massive traffic jams.

It is no surprise that Cloud providers are launching or looking to launch their own CDNs. It is not easy though to build out POPs across the globe even for large companies. For video the Cloud will be distributed and stretched to include the homes. It is the management of content that will be Cloud based but the data is more likely to reside on the edges. Microsoft has over a period of time has moved away from using Akamai and Limelight networks to owning CDN assets on the edges and Azure CDN i believe is totally MSFT owned now.

Things are getting really interesting in this space and it may be time to go long on Akamai again but at $40+ it is a little too high for me.

No comments: