Will Limelight’s New XD Platform Threaten Akamai’s High-Margin Business?

Yesterday, Limelight Networks made two related announcements; a new global content delivery platform, called the XD platform, and two new services based on that platform, called LimelightCONTROL XD and LimelightDELIVER XD. I’ve been getting a lot of questions from folks about these announcements, especially since one of the releases contained a quote from Overstock.com, a customer that as far as I had known, had only been using Akamai.

Many are asking me if this new platform is going to allow Limelight to really push into the value add services market that Akamai has dominated for so long. I’ll be posting a deeper look at Limelight's technology hopefully later in the week, but in the meantime, here’s an overview of the news, as well as an answer to the question I’ve heard the most: is this a threat to Akamai's high margin business?

Limelight's new XD platform features the same basic architecture as Limelight’s previous network, still utilizing their 15,000+ servers deployed around the globe, connected to 900+ last-mile networks. In addition, Limelight now has 8 million externally-deployed user
agents, deployed around the Internet, feeding data back to Limelight
about conditions on last-mile networks and Internet backbones (this is
one of the areas that I hope to learn more details about during a
scheduled briefing with Limelight later this week).

The new XD platform uses new edge server software that includes something Limelight calls “Adaptive Intelligence” that adjusts protocols in real-time for each connection or user request, which Limelight says significantly improves delivery performance. All existing services run on the new platform, so there is no migration for current customers as they are already running on the new XD platform. (Limelight’s delivery this past weekend of “The Wizard of Oz” for Netflix was all done on the new XD platform).

Limelight's XD platform also supports new services, the first of which Limelight also announced yesterday, called LimelightDELIVER XD and LimelightCONTROL XD. LimelightDELIVER XD uses the new Adaptive Intelligence feature of the XD platform to provide faster and more consistent object deliveries to users and LimelightCONTROL XD provides enhanced reporting and management features, including self-provisioning.

It is important to keep in mind that “CDN services” is not one single market, but a collection of sub-markets: streaming, large object delivery, small object delivery, whole site and dynamic content delivery, and overlay routing.  As I have written in the past, CDNs are starting to do a lot more than just deliver video on their networks. CDNs offer services in some or all of these areas, and also mix and match these, or parts of these, into services aimed at particular customer business problems. What Limelight announced yesterday is focused on object delivery, not whole site and not transactions. So just by themselves, today’s announcements probably don’t fundamentally rewrite the rules of the CDN industry.

But it seems pretty clear to me that today’s announcements are just the beginning and that there’s more to come. Limelight's XD platform announcement, in particular, seems like a “foundation” announcement on which Limelight will likely build other services. Globally deployed user agents that collect data on Internet and last-mile conditions – all the way to end user devices – and feed that data back to the CDN is potentially pretty important stuff.

And the Adaptive Intelligence approach seems pretty interesting too, as it extends the CDN “toolkit” beyond just resolving hostnames to edge servers that will handle the next few minutes’ worth of content requests. It’s an approach that extends down to the individual connection and out to the very end of the last mile. If it really does make Internet connections significantly faster (by using them more efficiently) on a case-by-case basis, and if Limelight applies this approach to other kinds of CDN services, like whole site delivery and transactions, then this could disrupt Akamai's value add services.

But Limelight hasn’t announced those kinds of services just yet. So today, I’d say this is a pretty important announcement for companies doing object delivery – small or large – and that it may just be the beginning of something fundamentally very significant – but we’ll have to wait and see for sure if it has any impact on Akamai's value add services.

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