CDN market moves: Alcatel-Lucent snaps up Velocix

The more we gobble up online videos, music and games, the greater our expectations for fast downloads and uninterrupted access. The explosion in rich media content -- combined with end users’ access expectations -- is driving interest in content delivery networks (CDN). 

CDNs replicate video and media content to a geographically dispersed network of servers, allowing providers to serve content to end users faster and more reliably than if all requests were being handled from a single source.

The latest big tech vendor to invest in the market is Alcatel-Lucent, which has been accelerating its efforts to support rich media content delivery and last week announced its acquisition of Velocix.

UK-based Velocix (formerly CacheLogic) offers CDN infrastructure and services to media, entertainment, software and telco industries. One of the company’s offerings is Velocix Metro, which is positioned as a turn-key solution that lets Internet and broadband service providers deploy their own advanced delivery capabilities atop the Velocix network.

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The more we gobble up online videos, music and games, the greater our expectations for fast downloads and uninterrupted access. The explosion in rich media content -- combined with end users’ access expectations -- is driving interest in content delivery networks (CDN). 

CDNs replicate video and media content to a geographically dispersed network of servers, allowing providers to serve content to end users faster and more reliably than if all requests were being handled from a single source.

The latest big tech vendor to invest in the market is Alcatel-Lucent, which has been accelerating its efforts to support rich media content delivery and last week announced its acquisition of Velocix.

UK-based Velocix (formerly CacheLogic) offers CDN infrastructure and services to media, entertainment, software and telco industries. One of the company’s offerings is Velocix Metro, which is positioned as a turn-key solution that lets Internet and broadband service providers deploy their own advanced delivery capabilities atop the Velocix network.

The purchase of Velocix puts Alcatel-Lucent in a position to help network operators that are struggling to meet customer demands for rich media content delivery, said Melanie Posey, research director at IDC. Alcatel-Lucent will be able to offer “... technology solutions for localized caching, as well as metro and regional/national overlay CDN services that enable ISPs and content providers to establish mutually beneficial commercial agreements,” Posey said in a statement.

For the CDN market as a whole, Alcatel-Lucent could be an interesting game-changer given “its deep pockets and existing relationships with carriers,” according to Counse Broders, senior research director for telecom services at Current Analysis.

“Alcatel-Lucent ... is using the Velocix purchase to move beyond its offerings to get deeper into the CDN business and help clients that need better rich media deliver support. If the company is successful in this space, Alcatel Lucent will not only be able to tap a new revenue stream but also bolster its business by promoting more growth in that sector,” Broders wrote in a recent research report.

But it won’t be a slam dunk, Broders noted: “While Alcatel-Lucent sees rich media delivery as a good future strategy, it faces a competitive market for CDN services and its traditional competitors such as Cisco also see this space as a sector ripe for their own opportunities. This assures an even tougher market to crack in a tough economy.”

The CDN market is made up of specialists including Akamai, Limelight Networks and Mirror Image -- and scores of smaller CDN specialists -- along with telcos such as AT&T, Level 3, and Global Crossing that offer content delivery services. 

This latest deal may even inspire Alcatel-Lucent rival Cisco to make a similar investment, suggested Current Analysis’ Broders.

“Cisco, which already has been touting the virtues of rich media and support for CDN capabilities, may find this move presents a greater shift to services on the part of its rival, and it may want to look at options of acquiring a CDN player itself that would be a suitable partnership to extend to carrier customers,” Broders wrote. “Limelight, which is already playing in this space with partnerships such as Global Crossing, might be a good acquisition target for Cisco to consider as a counter to Alcatel-Lucent’s move.”