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Cotendo should make it easier for Akamai to operate its own services, as the companies had become something of competitors over recent years, according to AllThingsD. Both operate networks based around similar ideas: that you can access content much faster when it sits on a server that is closer to your actual location than one that might be halfway across the world.

But Cotendo is focused on mobile, which is of course driving much of the growth in Internet services these days. The company has 100 employees, half of whom are located in Israel, and had developed a reputation for moving faster than older companies like Akamai to embrace new trends. That speed led to some patent disputes between Akamai and Cotendo.

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Cambridge, Mass.-based Akamai is the great-granddaddy of CDNs, while Cotendo, of Sunnyvale, Calif., was seen as a leaner, younger competitor that leveraged outside data centers so it could concentrate on building and delivering web content acceleration services. Akamai fields 95,000 servers worldwide and delivers between 15 percent and 30 percent of all Internet traffic. But the CDN landscape is changing as more players — including some of the world’s largest telcos — enter the arena.

The news wasn’t totally shocking — there had been rumors that Cotendo was in play with Akamai on a list of several possible suitors that also included Juniper Networks and AT&T  – two of Cotendo’s partners.

In the statement announcing the deal, Akamai CEO Paul Sagan said:

As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo. Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.

The world of CDN is definitely changing with the proliferation of connected devices and sensors.

Feature photo courtesy of Flickr user 401K

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The solution works by putting Citrix NetScaler products within Cotendo points of presence around the world, in addition to enterprise data centers. The combination enables dynamic acceleration of enterprise applications throughout a mix of private and public clouds, boosting performance by 50 percent to 80 percent. It also reduces bandwidth requirements for associated network connections by between 50 and 95 percent.

The NetScaler CloudConnector uses a combination of amplified performance optimization and enhanced compression techniques to speed up delivery while lowering the amount of outbound data center traffic. That reduces the amount of infrastructure needed to support enterprise applications, and the amount of bandwidth used by mobile, web and SaaS applications.

In addition to speeding up the delivery of mobile, web and SaaS applications to native LAN-like performance levels, the NetScaler CloudConnector creates secure connections with users on home and mobile networks. By combining Cotendo’s distributed monitoring technology with Citrix application firewalls, the combined solution can detect security threats. It also provides higher levels of personalization and localization for remote workers, by optimizing support for individual mobile devices.

This isn’t the first time a CDN has connected with an infrastructure company to speed up private and public cloud applications. The Citrix-Cotendo hookup is similar to a partnership between Akamai and Riverbed announced earlier this year. In both cases, the goal is to improve the availability or enterprise apps as they move into the cloud.

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What companies like Appcelerator, Cotendo and Urban Airship–which all work with web developers to speed delivery of content to consumers–really worry about is the growing fragmentation of the software stack they work with as well as potentially hobbling patent litigation.

“Fragmentation is occurring at every layer for the stack–at the tools level, at the clouds themselves, the carriers and everything in between,” said Jeff Haynie, CEO of Appcelerator, speaking at the Mobilize 2011 conference on Monday.

Another, related issue, is the rise in IP litigation which makes nearly everyone nervous, said Scott Kveton, CEO of Urban Airship. ”The lawyers are killing it, and it’s a bummer because it’s stifling innovation.”

Patent battles are raging around the industry with Oracle’s ongoing litigation against Google for its use of Java in Android, as a high-profile example.

Perhaps more mundane a problem is the age-old issue of latency.

As more people demand richer and more dynamic content, there’s a technology challenge, said Shlomi Gian, GM mobile services for Cotendo. “As content gets more dynamic and less cacheable, we still want it fast. We want it as fast as our desktop. today it takes 10 to 12 seconds to load a page. That gap is an opportunity,” Gian said.

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It’s no secret that Cotendo didn’t build its own infrastructure, but it’s interesting to know whose data centers it is using. Equinix data centers are not only high-end in terms of their specifications but are also strategically located for maximum connectivity. Further, Equinix has a lot of customers, so for services like its Mobile Acceleration Service, Cotendo is able to reside in the same data center as the mobile content it’s serving.

Akamai has dominated the CDN market for years, but the market is undergoing serious changes. In some ways, it’s on a level playing field with younger competition such as Cotendo, as well as telcos trying to get into content delivery, when it comes to delivering mobile content and dynamic content rather than traditional static content. For providers like Cotendo, being able to focus on new software to deliver new types of content — and to leave data center operations to the experts — provides something of a competitive advantage against its deep-pocketed and more-experienced rivals.

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As a report last year from GigaOM Pro (sub req’d) explains in detail, delivering static content is easy for CDN providers, but dynamic content and personal content present a bit of a challenge because that type of content require additional processing in order to get the right individualized content to each user. According to the press release announcing Cloudlet, the new service “addresses the growing need for content providers to deliver more personalized, customized and device-specific content efficiently and quickly, thus improving the users’ experience and ensuring high performance without increasing infrastructure complexity, spending or headcount.”

The key word is quickly, which is largely what distinguishes Cloudlet and Cotendo from competitive offerings. In theory, running business logic on the edge nodes where content is stored is faster, because web servers are spared from the task having to handle and process content requests. Amazon Web Services’ CloudFront service and Akamai serve static content from edge locations, but still route requests for dynamic and personalized content through the customer’s web servers. Akamai does have a service called EdgeComputing that runs parts of an application’s business logic on edge nodes, but it targets interactive enterprise applications, not content delivery.

Any slight edge Cotendo can get in the CDN market is worth its weight in gold. Not only does it have to compete against the giant Akamai — which sued Contendo for patent infringement in November, just a month before losing its appeal in a similar lawsuit against Limelight — but also against telcos that are increasingly equipping themselves with content-delivery technology from network vendors like Juniper Networks, and from cloud computing providers such as AWS that utilize their global server footprints to underpin CDN services. In its attempt to steal revenue from underneath Akamai’s shadow, Cotendo is actually has a reseller partnership with AT&T, which now uses Cloudlet as part of its Content Acceleration suite and which already has signed on AccuWeather as Cloudlet customer.

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While most CDNs are geared toward enabling media companies to better deliver video and other rich media objects to end users, Cotendo has taken a bit of a contrarian approach, focusing primarily on speeding up the delivery of small or dynamic objects. As a result, Cotendo’s products are more aimed at electronic retailers, financial services firms, social networks, news organizations and other sites that are not media-heavy, but could benefit from faster loading times.

It’s a high-value and high-margin business, and one that Akamai has essentially owned ever since it acquired Netli in 2007. But it’s also an increasingly crowded segment, as competitors such as Limelight Networks, CDNetworks and Edgecast have all announced plans to roll out dynamic site acceleration products of their own.

Altogether Cotendo has raised a total of about $22 million, including a $7 million round that it announced in March 2009. With the new financing, Cotendo hopes to continue its market expansion in Europe, where it recently opened offices in France and Germany. The company also hopes to add more functionality to its product suite, which will help its customers to improve SEO and transactional services.