C&W: A profitable CDN
 
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As you probably know, C&W acquired Digital Island in a bargain-basement deal last year. It got Digital Island's 10 data centers, hosting capabilities and its content delivery network (which Digital Island got when it merged with Sandpiper Networks a few years ago).
C&W integrated capabilities from Digital Island and Exodus, which it acquired earlier this year, to offer a complete end-to-end IP suite of services. One of those services is content delivery. A spokesman says C&W's CDN business became profitable last month. A big reason for that is the backing of C&W.
The spokesman says that by transitioning the CDN service onto C&W's global IP network, the CDN's operating costs have been reduced by 75%. While that's good news by itself, the CDN service is also being bolstered by happy customers. C&W says revenue from CDN customers has grown 30% to 40% during the past year. Traffic on the CDN has doubled during the same time.
In addition, customer retention has been strong because of the financial strength of C&W, the spokesman says. C&W's CDN customers include Microsoft, Sony, Disney, CBS Sportsline, Corel and Intuit. All of Microsoft's Windows Updates are delivered to customers over C&W's CDN network.
But how will the CDN market shake out? While the pure-play providers such as Akamai, Speedera and Mirror Image seem to be doing OK, there is growing competition from telecommunications companies such as C&W, AT&T and Sprint. All three are offering CDN services, and all three have existing networks - so no need to build out infrastructure.
For the most part, the pure plays say their capital expenses have been brought under control. But another issue is that the telcos can provide a deeper level of services beyond just content delivery. It will be interesting to see how this market develops.
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Denise Dubie is a Staff Writer covering network management at Network World. She also works as a freelance writer in the Boston area. You can reach her at ddubie@nww.com.
