38 Comments

Summary:

Akamai, Limelight, Level3 and more than a dozen other start-ups should be worried about Amazon’s move into the content deliver business. Amazon Web Services’ latest offering will cause price pressure in an already commoditized business.

[qi:080] It was a matter of when, not if, that Amazon would launch a content delivery business in addition to its current suite of web services that include S3 storage service and EC2 on-demand computing. The Seattle-based company has announced its intention to offer a content delivery service that could shake the very nature of the industry and pose a serious challenge to not only dozens of CDN upstarts but also become a thorn in the side of existing giants such as Akamai Technologies and Limelight Networks.

In an email to its customers today, Amazon said that the service will be available later this year and will utilize the company’s points of presence in North America, Europe and Asia.

This new service will provide you a high-performance method of distributing content to end users, giving your customers low latency and high data transfer rates when they access your objects. The initial release will help developers and businesses who need to deliver popular, publicly readable content over HTTP connections.

Ironically, Amazon was beaten to the CDN punch by New York-based Voxel, which started offering CDN services based on Amazon’s S3 service. “We are announcing this right now because we want to give a heads up to our customers,” said Adam Selipsky, VPr of product management and developer relations for AWS. It’s more like putting their competition on notice, but Adam was too polite to say that. “It is a more horizontal and broad offering.” In other words, while it is not going to replace Akamai tomorrow, it is going to make CDNs affordable even for the tiniest startup, without major cash outlays.

Why is this service disruptive? Amazon is going to bring a level of transparency to a business that has a sales model much like a brokerage firm in the 1980s. Amazon wants to make buying CDN services as simple as buying a book. Amazon executives told me that company is going to be charging its customers on usage instead of the long-term contracts current players foist on their clients.

In addition, the company will publish its prices on the web — most importantly it is going to be inexpensive. And that will make the service even more attractive to hundreds of small companies who are already using Amazon Web Services for their web operations, who don’t want to sign long contracts with CDN operators. When I asked Tal Saraf, general manager of the AWS Content Delivery Service, if the company expected the video-delivery to be one of the most used service, he said the company expected to delivery all sorts of content, including web objects (images, JavaScripts etc.)

You’ll start by storing the original version of your objects in Amazon S3, making sure they are publicly readable. Then, you’ll make a simple API call to register your bucket with the new content delivery service. This API call will return a new domain name for you to include in your web pages or application. When clients request an object using this domain name, they will be automatically routed to the nearest edge location for high performance delivery of your content. It’s that simple.

Amazon executives declined to talk about the pricing. “We will talk about the pricing when we launch the service,” Selipsky said. He declined to comment on the impact the pricing will have on their competitors -– nearly two dozen content delivery networks –- and how much their business is going to suffer. Dow Jones Venture Source estimates that from 2005 through the second quarter of 2008, almost $980 million was invested in content delivery companies.

If Amazon delivers what it is promising -– a simple, API-based CDN – then it would put then not only ahead of all CDN players, but also force rivals to meet the rules (and pricing) set by Amazon. There is a good chance that it’s going to drive weaker players right out of the game.

My final take on this news: Akamai is less likely to be impacted in the near term, but it further commoditizes the CDN business and forces a big shakeout in the industry, taking down the small and the weak. Akamai has been focusing on value-add services, as a way to stay ahead of the commoditization of the basic CDN services.

Read Amazon CTO Werner Vogels take on the news on his blog.

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  1. Amazon Web Services to Launch CDN Services « NewTeeVee Thursday, September 18, 2008

    [...] Amazon Web Services to Launch CDN Services Akamai, Limelight, Level 3 and more than a dozen other startups should be worried about Amazon’s move into the content deliver business. Amazon Web Services’ latest offering will cause price pressure in an already commoditized business. In an email to its customers today, Amazon said that the service will be available later this year and will utilize the company’s points of presence in North America, Europe and Asia. This is good news for online video startups that are looking for CDN services but are on a budget. The company will charge its customers on usage instead of the long-term contracts current players foist on their clients. In addition, the company will publish its prices on the web and, most importantly, it is going to be inexpensive. You can read our full news analysis on GigaOM. [...]

  2. This is interesting but expected news. Also interesting that you mention Voxel- check out their new website and recent Press Release. It seems that not only did they do the S3 integration but as of a few days ago they are publishing tiered pricing on their own CDN service and it is quite competitive with Amazon S3. And they let you combine your bandwidth with their hosting products at no premium. I wonder if this Amazon ‘coming soon’ annoncement is in response to the PR that Voxel issued yesterday.
    We know Amazon already has a few POPs in the US and one in Europe. They are going to have to do a lot of work to build out their global network to compete with the likes of Akamai and Limelight. I wonder if bandwidth on Amazons new CDN will be the same price as S3. Overall, somewhat of a yawn. Companies like Voxel and Panther Express are already well on their way to commoditizing the CDN industry. And the fact of the matter is for most people a proper CDN is a far better solution than a single location download service like S3.
    Providing CDN is more than raw API and moving bits that S3 provides. What about reporting and customer service? Those are two big items that Amazon has an uphill battle on. A simple API for their CDN isn’t going to suffice for big customers.
    And what about Live streaming services? I wonder
    The market is getting heated and moving very quickly. Interesting times.

  3. Amazon launches its own CDN Thursday, September 18, 2008

    [...] Om Malik explains why this is an disruptive service: Amazon is going to bring a level of transparency to a business that has a sales model much like an brokerage firm in the 1980s. Amazon wants to make buying CDN services as simple as buying a book. Amazon executives told me that company is going to be charging its customers on usage instead of long-term contracts current players foist on their clients. I hope you like that post! The Next Web Blog covers start-up news from all over the world (not just the Valley), exciting new technologies and inspiring entrepreneurs. If you’re new here, you may want to read our ‘About’ page and subscribe to our RSS feed. Do you have a start-up that we should write about? Contact us! Thanks for visiting and hope you come back again! amazon, CDN, EC2, S3 digg_url = ‘http://thenextweb.org/2008/09/18/amazon-launches-its-own-cdn/'; digg_bgcolor = ‘#ffffff'; digg_skin = ‘compact'; About the author: Patrick de Laive is co-founder of Fleck and initiator of The Next Web Conference, Bowlr and OpenCoffee Amsterdam. Check his LinkedIn profile for more information. Post that could be related to this post: Amazon.com is down…A few hours ago I bought a few books in anticipation of my next holiday. I do hope they got through before the servers crashed. Yep, Amazon is down with a ‘Http/1.1 Service Unavailable’ error…Rumor: Amazon Kindle 2 Coming This FallWe would like to give you an early suggestion for the holiday season, Crunchgear heard an “insider” whisper at Amazon about an update to their electronic book reader. The electronic book seller is planning to…Amazon Web Services: Lower Data Transfer Costs Werner Vogels, CTO Amazon at The Next Web Conference in 2008.One of the hot companies here in San Francisco is not a start-up but a well established company who launched a new service that almost… [...]

  4. AmazonがAkamaiのようなCDNを開始と発表 | 秋元@ウラジオストックは高くて遠いことがわかった Thursday, September 18, 2008

    [...] via Gigaom [...]

  5. Pierre Col – UbicMedia Thursday, September 18, 2008

    Great move for Amazon S3 users !

  6. links for 2008-09-18 « Brent Sordyl’s Blog Thursday, September 18, 2008

    [...] Amazon Launches Content Delivery Network. Rivals Watch Out! – GigaOM o hundreds of small companies who are already using Amazon Web Services for their web operations, who don’t want to sign long contracts with CDN operators (tags: aws s3 cdn) [...]

  7. I’m a little confused. CDN is a low margin business, yet that isn’t stopping Amazon from entering it. I know that their other services aren’t as substantial as their main e-Commerce business but this has to make you a little made if you’re an investor.

    And from the viewpoint of a prospective user of the service, it’s hard to get too excited when other Amazon Web Services go down and out and business are left to suffer. Building on Google (not that I’m endorsing them) seems to just work – except for email.

    Lets just hope that they have a tighter grasp on uptime with this.

  8. Perseverance Trumps Talent » Blog Archive » Amazon Web Services to include content delivery service Thursday, September 18, 2008

    [...] Om Malik of GigaOm analyzes the potential of an Amazon CDN, noting that AWS S3 customer Voxel beat Amazon to the bunch, and discusses the threat this [...]

  9. Amazon’s new CDN: More than just footprint in Asia | Bitcurrent Thursday, September 18, 2008

    [...] around the globe through local access,” announced Amazon CTO Werner Vogels on his blog. Om beat me to the punch on this one and has a great writeup, [...]

  10. Amazon announces CDN plans « marcellus weBLOG Thursday, September 18, 2008

    [...] Amazon announces CDN plans Amazon just announced its plans to launch its own content delivery network. Read more about it at GigaOm. [...]

  11. The title of this post is misleading, and unfortunately it’s already on Techmeme. Amazon hasn’t launched the service yet, it’s coming “later this year” as you even noted later in the post. So it’s either launched or it isn’t, and the answer is “isn’t.”

  12. Fabian Schonholz Thursday, September 18, 2008

    Om:

    I totally agree – not if but more when. People are already using S3 as a CDN anyway, independently of what Voxel is offering.

  13. Amazon будет делать CDN – александр.moskalyuk.name Thursday, September 18, 2008

    [...] Amazon объявила о запуске службы доставки контента. Желающих [...]

  14. Amazon to Launch Content Delivery Network | GroupHelp.NET Thursday, September 18, 2008

    [...] as Om Malik points out, New-York based Voxel just announced a CDN solution based on S3. Amazon rarely [...]

  15. Amazon to Launch Content Delivery Network | Web News Aggregation Thursday, September 18, 2008

    [...] as Om Malik points out, New-York based Voxel just announced a CDN solution based on S3. Amazon rarely [...]

  16. Amazon to offer CDN services « Ranjeet Walunj Thursday, September 18, 2008

    [...] GigaOm, interestingly indicates that this move by Amazon, looks like a preemptive move, as New-York based company Voxel just announced CDN solution based on S3. [...]

  17. Interesting, but unless they price their CDN less than S3, Amazon won’t be the cheapest player in the game, like they are with S3 (and almost the only player with S3 too).

    Even if it is the same price as S3 (like a free add-on), then value companies like SimpleCDN will still provide huge savings, especially at lower transit numbers (less than 150TB, etc.).

    Further, early indications point to a HTTP only delivery CDN. What about SSL? What about Flash, Windows Media, 3GPP streaming? And live streaming?

    I mean Amazon announces that they *are going to* launch a CDN service (a basic one at that), they don’t even announce pricing, and already we are calling for the death of all the new CDNs in the marketplace.

  18. Tech Trader Daily – Barron’s Online : Amazon Plans Content Delvery Network; AKAM Shrs Fall Thursday, September 18, 2008

    [...] another good take on the service – and its potential to shake up the CDN market – from GigaOm’s Om Malik. He doesn’t see near-term risk for Akamai, but nonetheless finds that the service [...]

  19. Paid Content : Amazon Launches CDN As It Enters A Highly Competitive Field Thursday, September 18, 2008

    [...] customers on usage instead of the long-term contracts current players foist on their clients, as Om explains here. There will be no long term contracts and it will publish the prices online, something of a rarity [...]

  20. Tirana Magazine » Blog Archive » » Amazon tees up content delivery service Thursday, September 18, 2008

    [...] GigaOm’s Om Malik said that Amazon’s service will be disruptive to content delivery network (CDN) incumbents, such as Akamai and Limelight Networks: Amazon is going to bring a level of transparency to a business that has a sales model much like an brokerage firm in the 1980s. Amazon wants to make buying CDN services as simple as buying a book. Amazon executives told me that company is going to be charging its customers on usage instead of long-term contracts current players foist on their clients. [...]

  21. Yet another cool service from Amazon for the average Joe. We have to wait and see what the pricing be for this service, and how much more will it cost from the standard S3. Will the price be low enough that low-budget customers will make the move from S3 to CDN?

  22. I think Ashish Prasad hit the nail on the head, I think this Amazon CDN service will be aimed at smaller business and smaller developers. I wouldn’t be too worried, yet, if I was one of the already established CDNs.

  23. FT.com | Tech Blog | Amazon has cloud content-delivery edge Thursday, September 18, 2008

    [...] Instead, it is targeting smaller players and start-ups, thereby threatening the smaller CDNs, says Om Malik. [...]

  24. Amazon gets into the CDN business « CloudPundit: Massive-Scale Computing Thursday, September 18, 2008

    [...] GigaOm and Dan Rayburn have more details about the announcement, and come to similar conclusions: Despite how badly the stock market is beating up on Akamai in the wake of this announcement, this really has very little impact on them. I concur with that bottom line. [...]

  25. Amazon’s new CDN offering to come « Toshi Aizawa Friday, September 19, 2008

    [...] company is very traditional and conservative. That said, its article quotes like “Om Malik, GigaOm, says that…” “Mr. Dan Rayburn from Seeking Alpha expresses…” I am [...]

  26. Amazon to Launch Content Delivery Network | InternetArticle For Free Friday, September 19, 2008

    [...] as Om Malik points out, New-York based Voxel just announced a CDN solution based on S3. Amazon rarely [...]

  27. No-frills HTTP-only CDNs like Panther Express are screwed by the Amazon CDN announcement. Just in time for their new VP of Sales and his new sales team.

  28. Amazon’s Getting It Right With CDN | Voxel Blog Monday, September 22, 2008

    [...] their API, supporting authenticated buckets (which Om Malik kindly pointed out in his excellent coverage of the announcement over at GigaOm). On Wednesday of last week we announced our Universal Transfer [...]

  29. Windows y Oracle en la nube con Amazon (CDN de propina) | Noticias, novedades, tecnología, programación – Bit & Bit Wednesday, October 1, 2008

    [...] Amazon también se postula como “CDN o Content Delivery Networks”. Ya hablamos de este tipo de servicios cuando lo de Akamai para acelerar Bittorrent: la idea se acerca a un “hosting distribuido”, el usuario hace su petición de contenido (típicamente multimedia), el cual el CDN tiene replicado en multitud de servidores. A continuación localiza el servidor más cercano al usuario y desde ahí le sirve el contenido de forma transparente para él… y en este sector crítico para las grandes webs ha entrado Amazon. Lo contaba Giga Om. [...]

  30. Crushing Bandwidth – One Cloud at a Time | CloudAve Sunday, October 5, 2008

    [...] Amazon Launches Content Delivery Network. Rivals Watch Out! [...]

  31. here is a video of Werner Vogels, CTO of Amazon, talking about their push into becoming an infrastructure company that supports other companies:

    http://www.scribemedia.org/2008/10/15/werner-vogels-amazon-asw-s3-ec2/

  32. Akamai Joins The Targeted Advertising Rush – GigaOM Tuesday, October 21, 2008

    [...] core business of charging customers to deliver their web sites faster, is facing falling prices and increased competition. Akamai addresses privacy concerns by stressing that both aCerno and Akamai anonymize user data and [...]

  33. Rackspace Buys Two Startups to Beat Amazon’s Cloud – GigaOM Wednesday, October 22, 2008

    [...] last month launched its own content delivery network for example. Rackspace is trying to keep up, through these acquisitions and even a CDN efforts also [...]

  34. 91d437f0fb56cfb5b64de81b60bd6738 » Is Amazon Ready For The Enterprise? Tuesday, October 28, 2008

    [...] performance: Amazon’s CDN will get static content closer to users. With availability zones, Amazon can also get computation near the edge. All of this reduces the [...]

  35. Amazon’s CloudFront Could Storm Rival CDNs – GigaOM Tuesday, November 18, 2008

    [...] of its content delivery network service called CloudFront. As Om mentioned in September when the service was announced, this is a good move for Amazon, and something that may put the hurt on fellow CDNs such as [...]

  36. As Clouds Reach the Enterprise, Opportunities Are Clear Thursday, March 19, 2009

    [...] Stacey Higginbotham | Thursday, March 19, 2009 | 9:00 PM PT | 0 comments It’s been about three years since Amazon made its risky bet on delivering computing and storage via the cloud. It started by offering commitment-free, pay-as-you-go storage, enabling startups to start scaling their businesses without significant investment in capital equipment. It later added compute cycles to its services and today has a host of other offerings, including a content delivery network. [...]

  37. Cloudbursting | Digital Asset Management Friday, March 20, 2009

    [...] It’s been about three years since Amazon made its risky bet on delivering computing and storage via the cloud. It started by offering commitment-free, pay-as-you-go storage, enabling startups to start scaling their businesses without significant investment in capital equipment. It later added compute cycles to its services and today has a host of other offerings, including a content delivery network. [...]

  38. Clouds and CDNs: a Match Made in Heaven? – GigaOM Monday, January 25, 2010

    [...] and Limelight are close partners, GoGrid just teamed with EdgeCast, and Amazon Web Services provides its own CloudFront service. The result won’t be improved application performance or faster database calls, but videos [...]

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