It was announced yesterday that content delivery network (CDN) upstarts Panther Express and CDNetworks merged. CDNetworks is a Korean based CDN, while Panther Express seemed to hold a lot of promise with a healthy venture capital backing. Perhaps this merger will strengthen Panther Express and the Korean based CDNetworks.
Both companies should have the full reality check of what it will require to take on CDN leader Akamai. Like anything else, when the competition is overloaded with many players, the companies that are leading the charge will usually evaluate and than combine forces. With Akamai having a huge head start in the CDN business, as the name player of the CDN world, you will most undoubtedly see more CDN mergers in 2009.
The need for CDN’s that provide quality services are bigger than ever with HD video moving online as well as other high bandwidth media content. The true leaders in this business will be the ones that offer something more for the money. Even though reports for Q4 show that CDN pricing has stabilized, with the cutbacks at such companies as Level3, that usually means that once again prices could be shifting.
When employees at these companies are let go, a few scenarios occur. One they end up starting a competing company in the same field, in this case another CDN company. Usually that new company benefits highly from the skilled workers who have worked at the competition for many years. Secondly, they end up being employed by one of the companies that they were competing with. When that happens they usually apply the strategic ideas they used at the old company. The more ethical way of basically – stealing intellectual information! In either case, the prices probably won’t be stable going forward into 2009.
While cheap is very compelling, and free is even better, if your CDN service goes down in the middle of the week for no apparent reason – What is the true benefit of cheap?