Market For Web Performance Getting Very Competitive, Data Shows Pricing Has Fallen By 30% This Year

Recent pricing data I’ve collected from over 150 customers taking web performance services from third-party CDNs including Akamai, Fastly, Amazon, Instart Logic, CDNetworks and others show that on average, pricing for web performance has dropped 30% since Q4 of last year. Multiple CDN have also confirmed this number and even Akamai, in a call with me in April, went on-the-record and agreed with that figure. That’s not to say every web performance contract has fallen in value, some have actually gone up as some customers are willing to pay more if the CDN can show a real performance difference over a competitor. And while that’s good, the bottom line is that the web performance market is starting to get very competitive with performance amongst vendors getting very close to one another, just like we saw in the media delivery business.

Anyone who has been tracking the media CDN business knows that pricing has hit rock bottom for some time, with the largest contracts being under $0.004 per GB delivered. And while web performance had always been the stand out product with high margins, we’re already starting to see pricing erode. It won’t drop as bad as we have seen with the media segment in the pricing declines, but make no mistake, web performance services are no longer a moat around any CDNs core business. The market for these services is now more competitive than ever, and that’s only going to increase.

Data from the 150 customers (contact me if you interested in buying the raw data) shows some very interesting trends not only on price, but also the fact that many customers are now using a dual-vendor approach for web performance services, just like they have been doing for media delivery. The number of customers now using two or more CDNs for web performance was a lot higher than I was expecting. In addition when customers were asked, “what has disrupted the market for web performance services in the past 12-18 months the most?”, many customers responded by saying “Startups that are more flexible and nimble“, and “Vendors offering such similar levels of performance“.

Don’t be fooled by what any CDN vendor may tell you, disruption is coming to the web performance market and I’m starting to see it show up in contracts with regards to pricing, multi-vendor usage and lower traffic growth than some have predicted. I expect the pressure amongst CDN vendors to compete even harder on web performance services is only going to intensify over the coming quarters.

If you are interested in purchasing the raw data collected from the 150 customers, please contact me.