Tata Communications Expected To Acquire Content Delivery Network BitGravity
[Updated Jan. 11th: The deal is now official.] Tata Communications, which in 2008 invested $11.5M in BitGravity and licensed their technology for Tata's own CDN service, is looking to acquire the rest of the company. Tata already owns about 15% of the company due to their initial investment in BitGravity and is now looking to acquire all the remaining shares in the privately held CDN. I've heard that the terms of the acquisition been agreed upon but that the deal is not yet official. When reached for comment, BitGravity said Tata had not closed a deal for the company but I'm hearing some BitGravity employees who are already telling others that they now work for Tata. When reached for comment over the holiday weekend Tata didn't deny or confirm the deal saying, "we do not have any information to share at this time."
For those that follow the CDN space, this deal probably comes as no surprise as BitGravity was pretty much out of options with regards to their business. BitGravity has been in the industry for a couple of years but simply wasn't able to grow revenue fast enough to seriously compete in today's crowded CDN landscape. The company also offered some of the lowest pricing in the market, without commits, and really focused their pitch on being the low cost leader in the market, which is simply not sustainable for any CDN. Even last month, the company was marketing their services via emails pointing out that their live event pricing started "at $1,000 per event in North America or Europe."
For BitGravity, the company made some of the same classic mistakes as many of the other CDNs have made over the years. The company spent so much time talking about their technology and trying to convince everyone about how much better it was than competitors that they never focused on how to turn it into a product. Technology is great, but it does not matter how good the technology is if you can't make it into a product or service and explain to the market and customers what the value is and why they should buy it.
The company also stayed in stealth mode for a really long time before they truly launched and when they did, they never really focused too heavily on marketing and sales and focused a lot of their product efforts on live streaming. BitGravity never really provided much in the way of technical details on their service and really focused on a lot of marketing words like "next-generation" without defining what that meant for customers. The company also took a big hit when their co-founder and CTO Barret Lyon left in mid 2009.
BitGravity's only real option at this stage of their business is to sell to Tata Communications, which would enable Tata to own 100% of the technology that runs their CDN. For Tata, it's a good move as long as the price is right and in this case, even though we don't yet know the terms of the final deal, Tata clearly has the upper hand in the negotiations.