Posted by : Randy Cooper in (CDN)

How CDN startup Cotendo is taking on Akamai

cotendo_logoWhen a new content delivery networks (CDN) startup named Cotendo exited stealth mode in March with $7 million in funding from Sequoia Capital and Benchmark Capital, a typical reaction among those who cover the space was: Is there really room for another player in the CDN space?

In the three months that followed, Cotendo named three customers — Conduit, Seeking Alpha and TechCrunch – all well-known names in online media and good examples of what Contendo says is a market that is still underserved despite the crowded CDN market.

Ask Ronni Zehavi, Cotendo’s chief executive officer, what separates his company from the other more established CDNs, and he says, for starters, “They sell a product, and we sell a service.”

Cotendo took a decidedly software-centric approach to CDN that it claims allowed it to gain efficiencies over rivals focused on making mere boxes: greater throughput, more requests per second and more object storage per server than competitors. Cotendo won’t quantify those claims or elaborate how those efficiencies were achieved, but Zehavi said they allow Cotendo to match the performance of the market’s leader, Akamai Technologies, which has the advantage of an extensive global installed base.

“It’s very difficult to fight against Akamai on scale,” Zehavi said. “They have their footprint. But what’s the cost of their distributed architecture? How much does it cost to be in almost every ISP around the globe? How efficient is it? You don’t need 45,000 servers to reach the performance they achieve. [Akamai’s product] was designed 10 years ago; the market has changed.”

Cotendo’s founders say they brought to the CDN space an outsider’s perspective and applied 10 years of experience working at an email security software firm called Commtouch Software. “In order to block spam and virus outbreaks, you need to understand real-time applications and efficient algorithms,” Zehavi said. “The experience we had in that domain was implemented into our CDN.”

Perhaps the boldest aspect of Cotendo’s strategy (if bold is the word for it rather than humble) is to focus not on streaming video, as all the other CDNs do, but on real-time applications like e-commerce as well as plain old static content, like time-sensitive Web sites.

Although video gets all the attention from CDNs, there’s a lot of other traffic out there. According to Cisco Systems, which regularly warns of an impending flood of video traffic, Internet video (not including peer-to-peer file-sharing) is still just a third of all consumer Internet traffic. And of course, that doesn’t include the traffic consumed by businesses. And while the sum of all forms of Internet video traffic – to PCs, TVs and video communications (but not file-sharing) – already exceeds Web and email traffic, the former is expected to grow some 1300% over the next five years, while the latter is expected to grow 2200%, to nearly 4 petabytes per month in 2013, Cisco said.

Another reason why there’s room for one more in CDN: Akamai only gets about half its revenue from CDN and the other half from value-added services, Zehavi said. While the CDN space might be full, he said, “I think value-added services is a growing market.”

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