Guest post by Scott Landman, Founder & Managing Partner Arcus Advisors, LLC
Cisco’s content delivery networking offering, Cisco Content Delivery System, part of the much larger Next-Generation Network Solutions for Videoscape, has not been met with an enthusiastic response by service providers, with only a few wins, including BT, Telstra, and Telecom Italia.
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Cisco is not alone in the delayed entry into this space. Only Alcatel-Lucent, with its Velocix acquisition, has made much headway. Most of the SP wins have come from the smaller providers, such as Verivue, Jet-Stream, and Edgecast, who are more nimble and have a CDN service background. The increased availability of open-source building blocks for CDNs has put additional pressure on providers of commercial solutions.
Partially, this is because of fundamental problems in the space, such as a lack of sustainable revenue-generating business models, a small total available market, crashing CDN prices, and significant headwinds, especially in the B2C space from political and piracy concerns. Cisco has its own set of problems with SP OpEx concerns related to training requirements for CDN NoC personnel. A busload of expensive CCIEs, when margins in the space are so thin, acts as an additional headwind for Cisco CDS adoption by SPs.
I asked a well-informed colleague a while back why big box companies have had so much trouble in the space. His answer was: ‘hardware.’ What he meant was that the content delivery space is evolving so quickly that large, traditionally hardware-centric companies have problems quickly adapting to new market realities, opportunities, and moving away from failed models.
The CDN solution space – as many like to say – is in the ‘early innings,’ with the majority of the adoption and revenues yet to come. The growth of mobile delivery, the difficulties for small companies with large-scale deployments, and, most importantly, the collapse of content delivery functionality from separate network elements and vendors into incumbent provider optical and packet networks play right to Cisco’s strengths.
Cisco’s plans with SDN are beyond the scope of this blog. But the separation of control and delivery planes is at the heart of today’s CDN solutions, where distributed logic – or as I like to tell non-geeky friend: you want this? It’s over here, let me get it for you – and commodity hardware combine to create massively scalable content delivery solutions.
If Cisco can address their operator OpEx issues and/or buy one of the small, private CDN solution providers, strip out the code, widely distribute it onto their layer 1-4 platforms, embrace an SDN model, then – by the 7th inning stretch – they are going to be winners