Voxel, the managed hosting provider, has built its own cloud computing product called SilverLining that will compete with Amazon’s (s AMZN) Elastic Compute Cloud and Rackspace’s (s RAX) CloudServers products. Thanks to its managed hosting business, Voxel plans to offer the same hybrid strategy that both Rackspace and ServePath offer, which combines dedicated servers with cloud computing for spikes in traffic or one-off projects.
Voxel adds another piece to these offerings with its content delivery network, says Raj Dutt, CEO and founder of the 10-year-old Voxel. Unlike Rackspace, which outsources CDN services to Limelight (s LLNW), Voxel can provide everything in house — and generates about $1 million in sales a month doing so. It also doesn’t make a distinction between buying bandwidth for pages delivered from the server and buying bandwidth to deliver content hosted on the CDN — a terabyte is a terabyte says Dutt.
The strategy of delivering bandwidth as just another component of the cloud, rather than a higher-margin add-on service will help commoditize the CDN business further. It’s a service many cloud operators are trying to provide, either on their own or through partnerships. Late last year Amazon launched its own CDN called CloudFront with competitive — and transparent — pricing.
“Every single CDN competes on price, and there are too many providers,” Dutt says. “And they’re all going after the same business, so what used to be high margin is now marginally better than selling IP transit.”
Last month, two CDN companies merged in a fire sale for one of the companies, signaling further stress in the industry. The top company in this space, Akamai (s AKAM), has been branching out into services and advertising. As cloud providers move to package CDNs with commodity compute cycles, we’ll see more CDN companies consolidate or get snapped up by cloud vendors aiming to bring them in house.