For years, Apple has been using multiple third-party CDN providers, including Akamai and Level 3 in addition to delivering content via their own CDN. In some regions, for instance China, Apple will also use a CDN that specializes in that region, like ChinaCache and ChinaNetCenter. Apple’s had a multi-CDN strategy for some time and doing some traceroutes yesterday, I see that Apple has recently added Limelight Networks into the mix. I can’t tell when Limelight was added, but from the testing I do frequently on where Apple’s content is being delivery from, it looks like Limelight has been added within the last few months. There is no way to tell how much traffic Limelight has and you have to trace a lot of content to see it since Apple shifts amongst the CDNs, but the timing makes sense.
On Limelight’s earnings call this week, the company mentioned they signed up some customers that they had to give a low price point to, which would impact margins in the short-term, before they expected the economics of scale to kick in. While Limelight had no comment when I asked them about Apple, traceroutes don’t lie. I’ve also learned that Limelight has gotten more of Microsoft’s traffic, be it at a low price point, but a lot of volume. So two of the contracts they were talking to are clearly Apple and Microsoft. How much volume they have we don’t know for sure, but it all aligns with some of the points Limelight made on their earnings call.
Another interesting thing talked about on Limelight’s earnings call was they are not seeing any slow down in traffic growth, which is the exact opposite of what Akamai said on their call last week. So far, no other CDN provider or content owner I have spoken to has said anything about traffic growth slowing. In fact, yesterday Facebook reported earnings and said they now see 8B video views per day, up from 4B nearly six months ago. And Limelight said on their call that they “achieved a new record for both peak bandwidth and terabytes delivered” in Q3. Limelight also mentioned that their “largest software and gaming customers peak traffic levels” are “growing at extremely higher rates versus a year ago and even sequentially.”
I don’t buy Akamai’s excuse that customers overall traffic growth is down and that the decline in the growth of their media business is not due to pricing or competitive pressure, when it clearly is. Akamai simply isn’t getting as large a percentage of traffic from the big CDN customers as they use to be. Apple adding Limelight to the mix and Sony adding Level 3 to the mix are both examples of that.
