Microsoft Builds CDN to Handle Massive Online Video Growth

microsoft-ednMicrosoft’s (s MSFT) bandwidth needs have been growing anywhere from 30-100 percent per year, and the biggest growth factor is online video. That’s one of the interesting tidbits revealed keynote by Microsoft’s Jeffrey Cohen that Dan Rayburn pointed to this week. Two years ago, only 10 percent of all data delivered by Microsoft and its CDN partners was video, according to Cohen. Next year, Microsoft estimates it to be 55 percent.

Cohen shared these numbers with the audience of the CDN Summit 2009 last month. He also outlined the company’s work on building out its own Edge Computing Network (ECN) to deal with these increased bandwidth needs, explaining that Microsoft  plans to deliver 60 percent of its data for all of the company’s services from its own Edge Network by next year.

Microsoft used to rely heavily on third-party CDNs to deliver its data to end users. In fact, just two years ago, 95 percent of that traffic came from CDNs like Akamai (s AKAM) and Limelight (s LLNW). Back then, Windows updates and other large files made up for 60 percent of Microsoft’s traffic. This year, those big chunks of data only account for 40 percent, and online video causes just as much traffic as large file delivery.

The company has been working on its own CDN for the last 3-4 years. Microsoft was thinking about buying a CDN provider for a while, but backed off from that idea and instead licensed technology from Limelight. Cohen told his audience that Microsoft intends to use licensed technology as a bridge and eventually just use in-house developments to meet its needs.

What will the EDN infrastructure look like? Cohen didn’t go into too many details, but other company representatives have previously stated that Microsoft is building at least 99 nodes around the world. What’s interesting about these nodes is that they will not only be delivering data to end users, but also facilitate P2P data delivery. An early Microsoft paper about ECN envisioned this as a kind of network-aware form of P2P that would reduce costs for Microsoft while keeping ISPs happy:

“(A) peer-to-peer network could be built dynamically which would reduce the amount of network egress bandwidth required from the ECN node while increasing the speed at which updates could be pushed to the entire network of users. By taking advantage of knowledge about ISP network structure (i.e. which IP address ranges belong to which ISPs) and structuring the P2P network accordingly, ISPs would also see reduced internet downhaul costs; information would flow from the ECN-deployed application into a small subset of an ISP’s total user base, and those users would pass the information amongst themselves within the P2P network.”

To be fair, the authors of that paper were talking abut delivering cricket match results, and not online video. However, Redmond has been experimenting with P2P video delivery before, and it’s own researchers have found P2P to be a viable solution for VoD. I personally wouldn’t be too surprised if P2P eventually played a role in ECN’s video delivery as well.