Posted by : Randy Cooper in (CDN)

Reports from Limelight, Level3 & Internap Reveal CDN Industry Strengths and Weaknesses

Reports came in this week from Limelight, still glowing from it’s patent victory over Akamai, Level3 and Internap. While there’s been some significant belt-tightening throughout the industry, these companies show the dichotomy of our business.

While larger CDNs seem to be weathering these economic tough times significantly better than smaller companies, I think this is more than just who has the most pennies in their pocketbook.

limelight-logoLimelight – well unless you just beamed down to our planet yesterday, you know of their big win against Akamai regarding patent litigation. Other than the obvious fact of not having to fork over big bucks to Akamai (I’m sure both sets of lawyers got rich though) they have no structure changes to make on their network and no further concerns regarding intellectual property. While this does make them a ripe candidate for being put up on the auction block, Limelight has much more to gain if it continues on and emerges on the other side when the economy recovers.

level3-logoLevel3 is `restructuring` like everyone else. Heck, can we just say ‘LAYOFF’? Everyone seems to be reducing head count (except for AT&T) which brings me to my next point – What’s the real resource of a CDN? The network? The peering relationships? NEGATIVE – it’s the people. It’s those smart guys and gals who make it work and can sell something as intangible as bandwidth. Reminds me of an old saying my grandfather taught me – measure twice, cut once.

internap_logoInternap – What can I say about the pig wollering in my own backyard? Internap is one of my hometown favs. Here in the ATL, we are blessed with a multitude of technology companies but Internap is one of those whose name always seems to float to the surface. They have a good product and an aggressive sales team so why have they struggled so? Eric Cooney, their new CEO called Internap a “diamond in the rough” and stated “Our IP and CDN businesses continued to underperform…”. “Continued to underperform” is CEOese for “we’re sucking wind and taking on water”. I hope Mr. Cooney can pull a rabbit out of his hat and turn that boat around.

Overall, this is an exciting time for the CDN business and in the months and years to come you will remember these times fondly. (Eh.. maybe not…)

Resources:
Limelight Networks, Inc. F1Q09 Earnings Call Transcript: http://seekingalpha.com/article/135930-limelight-networks-inc-f1q09-earnings-call-transcript
10-Q: LEVEL 3 COMMUNICATIONS INC http://www.marketwatch.com/news/story/10-q-level-3-communications-inc/story.aspx?guid={D7A87ECF-3A3B-4CFF-9421-CC325CD0CB7E}&dist=msr_4
Exec: Level 3 CDN Better Positioned After Restructuring http://www.contentinople.com/author.asp?section_id=450&doc_id=176497&f_src=contentinople_gnews
Internap Network Services Corporation Q1 2009 Earnings Call Transcript http://seekingalpha.com/article/136307-internap-network-services-corporation-q1-2009-earnings-call-transcript

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