9 Comments

Summary:

Updated: Quietly, CD Networks and Panther Express, two also-ran content delivery networks, have merged their businesses. The terms of the deal were not announced, which can also be also be interpreted as a fire sale by one of the parties. Update: A source familiar with one […]

Updated: Quietly, CD Networks and Panther Express, two also-ran content delivery networks, have merged their businesses. The terms of the deal were not announced, which can also be also be interpreted as a fire sale by one of the parties. Update: A source familiar with one of the parties told me that it was indeed a fire sale and Panther was sold for less than the money put into the company, essentially wiping out the common shareholders.

Panther Express, on the other hand, has been known for its aggressive pricing in the U.S. It has been growing fast but it is still far behind leader Akamai. Panther’s founders included alumni of DoubleClick, and the company raised over $23 million in funding from Greylock, Index Ventures and others. CD Networks is a Korean CDN provider well known for providing content delivery services to the gaming industry.

The merger once again brings into focus that the CDN business has become highly commoditized, thanks to the presence of too many players with very little value added services. The guys at Akamai realize that and have been building new value-added features such as software controls that allow dynamic site acceleration to stand out from the me-too CDNs. The current credit crisis has stopped the flow into CDN startups that were trying to cash in on the growth of online video, and one should expect more consolidation.

  1. Om, you are right on the money. I would expect serious consolidation in this market over the next 12-18 months.

    I’m not sure however, that I would consider CDnetworks an “also-ran.” CDNetworks raised $96.5mm just a bit over a year ago. That’s a lot of coin, and puts them in the #3 slot in terms of independent CDNs (behind Akamai and Limelight).

    Travis

    Share
  2. CDN provides a service that compensates for the deficiencies in the standard Internet architecture. As more applications and content become hosted in mega cloud data centers, and these hubs slowly build out better exchange routing between peers (not that capex intensive, compared to the outlays for the facility), the very last mile will be the block to low latency and high speeds. At that point, even Akamai can’t help you.

    It will be a dying business.

    Share
  3. [...] head start in the CDN business, as the name player of the CDN world, you will most undoubtedly see more CDN mergers in [...]

    Share
  4. @Travis

    You know I would never argue with you on the business, but just because CD Networks raised $96.5 million doesn’t make it a winner. Yes they have some cash they can use to buy market share but can they make money? That is essentially a problem with this CDN business. :-)

    Share
  5. CDNetworks has generated $34.3m in first 9mo of 08 (const. currency exchange) and $1.9m in profit. Foreign ops generated around $7m in revenue. That’s not a whole ton of money, but that’s more profit than GM’s making : )

    Share
    1. @Jim Davis

      Good comparison with GM, but then that’s less money than some of my competitors are making. I think the foreign revenues do tell the whole story here – $7 million: that isn’t that much even if you assume all of it came form US. Secondly, how much profit on that revenue of $7 million. As I said, they are a relatively marginal player.

      Share
  6. [...] 17 inch Macbook Pro Review Pirate Bay Day 9 Lenses Informational Why the Labels are Crying Wolf Panther and CDN Networks Merge Powerbook Battery Explodes RIP Rocky Mountain News Say Hello to Google Twitter Facebook Photos a [...]

    Share
  7. [...] month, two CDN companies merged in a fire sale for one of the companies, signaling further stress in the industry. The top company [...]

    Share
  8. [...] month, two CDN companies merged in a fire sale for one of the companies, signaling further stress in the industry. The top company [...]

    Share

Comments have been disabled for this post