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Good news, bad news. Akamai signed a new customer (Six Flags, Inc.) but had its stock downgraded by Banc of America Securities according to InternetNews.com.
This is becoming an all-too frequent story as the entire CDN sector is now in trouble. The cause? In a down economy everyone cuts luxuries, and the optimization of content delivery as offered by most CDNs is considered a luxury. It's better than centralized hosting and delivery, but not a requirement. And at a premium price, it's a discretionary expense. Centralized hosting is good enough for most of us. CDN customers are leaving even faster than those customers are leaving their web-hosting services. And they are leaving their web-hosting services, too.
Long term, I believe CDNs will be an important sector, but not until vendors can deliver content at a lower cost than that same content can be delivered from a central location. That time will come, once the current long-haul bandwidth glut is absorbed. But until then, CDNs will be delegated to delivering only streaming and large-object content, and in this economy, with low advertising budgets, there's very little demand for that.
The real question for now is: Who among the current crop of CDNs will survive until the economics evolve? Will companies like Amamai weather the storm, or will they die, only to rise again in different corporate shells as the technology and know-how pass over to the next generation of vendors?
Remember: Must be present to win.
Posted Wednesday, August 15, 2001 3:23:56 PM 
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