Technavio Eyes CDN Trends

May 12, 2017
According to Technavio research on the global content delivery network (CDN) market, the market is expected to grow at a CAGR of nearly ...

According to Technavio research on the global content delivery network (CDN) market, the market is expected to grow at a CAGR of nearly 30% between 2017 and 2021.

Ujjwal Doshi, a lead analyst from Technavio, said: "The global CDN market is expected to grow at a CAGR of close to 30% during the forecast period, owing to factors like the growing penetration of broadband services and the increased usage of rich media files across the media, enterprise, and entertainment sectors. Increasing amounts of video content being streamed over the Internet and the increasing usage of the Internet for communication in corporate organizations is also driving the market growth."

Technavio says the top three emerging market trends driving the CDN market are increasing development of content delivery clouds, growing pricing pressure on vendors, and major players building their own CDNs with transparent caching.

Increasing development of content delivery clouds

In the past five years, there has been a gradual shift from the use of traditional CDNs to cloud-based CDNs. Content delivery clouds improve delivery service capabilities of web applications and storage. They also provide access to numerous specialized services. Content delivery clouds facilitate possible research that emphasizes on recognizing essential application requirements, improved scalability, the robustness of systems, usability and access performance, reduced cost, durability of data, and support for security and privacy.

Growing pricing pressure on vendors

The increasing pricing pressure on vendors is one of the main trends being witnessed by the global CDN market owing to the intense competition. The market is dominated by Akamai Technologies, but that company is now witnessing immense competitive pressure from peers such as Level 3 Networks, Limelight and CDNetworks. As a result, Akamai Technologies has reduced its prices, which earlier used to adopt a premium pricing strategy for its CDN solutions. Hence, vendors, such as Akamai Technologies, are managing to attract more customers but are compromising with their margins.

Major players building CDNs with transparent caching

With a rapid increase in data usage on service providers' networks, it has become financially advantageous for big companies to build their own CDNs for consumers rather than outsourcing them. Apple used to rely on Akamai Technologies and Level 3 to deliver Apple-related contents including apps, iTunes videos, and software updates for iOS and OS X platforms. It has now built its own CDN to serve its consumers. This development is expected to affect the revenues of Akamai Technologies and Level 3 in the coming years, depending on the scale and location of the network.

"Leading brands like Amazon, Apple, Google, and Microsoft are the reason for the huge increase in Internet traffic. The inclination of these major service providers to own their dedicated CDNs is expected to be one of the key highlights during the forecast period," said Ujjwal.

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