What Could Apple’s iCloud Service Be Worth To Akamai? Here’s Some Numbers

Over the past few days I've been getting a lot of emails from individual Akamai shareholders as well as some Wall Street money managers, asking me what Apple's iCloud service might be worth to Akamai, if Akamai is doing the delivery for the new streaming music service. While I don't know if Akamai will be supporting the new iCloud service, my initial guess is that they will be. They are already the exclusive CDN for all of the iTunes content and back in January, I reported that Apple had renewed their contract with Akamai for additional volume for new services.

If Akamai is doing the delivery of content for the iCloud service that's good for the company, but the value of the delivery business won't be big since as far as we know, iCloud will only be for music and not for video. Trying to estimate the exact value of this new service to Akamai or any other CDN is hard, since we don't have any historical traffic data to go off of. Also, Apple's contract with Akamai is priced based on per Mbps sustained, not per GB delivered and all of Apple's other traffic determines the final price per Mbps paid. But if we run some calculations using per GB delivered pricing, we can get a rough estimate of what the contract could be worth.

Apple sells on average about 250M songs per month and that rate is only growing. If we estimate that users will stream 100% of the number of songs Apple sells per month, a three and a half minute song transfers about 1MB which would be 250,000 GB of transfer a month. If Apple was paying a penny per GB delivered, the cost to Apple would only be $2,500 a month.

On the flip side, if users stream more music with iCloud than they buy, which is highly possible, and did 4x what Apple sells each month, then the delivery value for iCloud content would be worth $10,000 a month to Akamai. Of course, these numbers don't take into account additional services Akamai might be providing to Apple to support iCloud, for instance security services or other solutions termed "value add" by the company, and the 250M stream numbers per month to start could be low. We just don't know since we don't have historical data to go from.

But the bottom line is that the delivery of audio content from iCloud is not worth that much to Akamai or any other CDN. The other services around iCloud could be worth more and if iCloud ends up supporting video content down the road, then the value of the delivery business would be much higher.

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Content Delivery Summit Videos Now Available For Viewing

All of the sessions from last month's Content Delivery Summit have been archived and are now available below for viewing. We've also added all of them to our conference video archive at www.streamingmedia.com/videos and presentations from the event are available for download from the CDN Summit website.

Keynote: Chris Osika, Senior Director, NA Lead IBSG SP Practice, Cisco

Read a recap of this keynote on StreamingMedia.com


Keynote: Barry Tishgart, VP, Comcast Cable

Read a recap of this keynote on StreamingMedia.com

CLICK HERE FOR ALL THE VIDEOS


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Updated Post: A Summary Of Transparent Caching Architectures

Updated June 8th: After getting some feedback from vendors and carriers in the market about this post, I have updated it with additional thoughts. My intention with the post was to help educate the market on how the architectures work and I was not trying to say one architecture is better than another since I am not a network engineer and don't operate a carrier network. I don't think the post was neutral enough and will be correcting that so I have re-written some of it and removed the references to performance. Also, in talking with both carriers and MSOs for the piece, it's clear that the two kinds of companies should not be combined in terms of how they deploy these solutions as MSOs are very different than carriers. I have also updated the title of the post so that it is simply talking architecture and not performance.

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Two weeks ago, at the Content Delivery Summit, one of the biggest topics being discussed was the technology of transparent caching (definition). Telcos, carriers, MSOs and ISPs are hard at work building out CDN and transparent caching services inside their network for the delivery of video. Over time, these carriers and ISPs plan to compete with SaaS based CDNs and take over more control of the delivery of content to their users, since many of them own the last mile. (See CDN Summit video: Transparent Caching: Cost Center or Business Opportunity?)

There are differences in the approach of many types of carriers in how transparent caching platforms are deployed. Some own vast libraries of video content and want to provide it to their subscribers on as many devices as possible, others are squarely involved in providing Internet services as a business and are focusing on network optimization. I hope to cover the differences in operators in future posts, but that will be for another day.

Recently, I wrote a post entitled "An Overview Of Transparent Caching and Its Role In The CDN Market", and this post looks to suppliment that with more technical details on the features and functionality required for the successful various architectures used during the integration of a cache system into an operator network.

When evaluating cache systems available on the market, operators typically consider two main the following parameters: impact on network costs and subscriber quality of experience, ease of deployment and operation, how the solution affects Internet application delivery and the larger Internet video ecosystem, and lastly, how it fits into the operator’s long-term content delivery network strategy. Before undertaking a deployment strategy, operators spend a great deal of time testing and evaluation the system's architecture and basic design, which will dictate its overall behavior and determine its ability to meet the operator's requirements. There are two three main transparent caching architectures currently on the market: called in-line and out-of-band two leverage an in-band architecture and one architecture uses an out-of-band approach.

In-Line Cache Architecture
In-band cache systems use a mechanism where Internet traffic is redirected to the in-band system. The user request is analyzed near the point of redirection, and based on an algorithm decision, specific content is cached or served from cache. The storage and analysis are typically collocated.

The two in-band architectures differ in the way they manage sessions and make decisions on what content is stored and served from the cache. One in-band architecture is a traditional cache proxy, in which every TCP session is terminated by the cache from the subscriber and a new session is created with the origin. The other approach is a transparent in-band cache, in which the session between the subscriber and origin is preserved, but requested objects are cached or served from cache based on analysis performed by the cache system.

Internet traffic is can be redirected to in-band cache systems by various methods: 1) policy-based routing (PBR) on currently installed network equipment; 2) from a deep packet inspection solution (existing or newly installed); 3) via Web Cache Communication Protocol (WCCP) or 4) through application load balancing equipment (existing or newly installed). The cache engine can also be embedded in the redirecting network element such as a BRAS, CMTS or DPI engine. The deployment method chosen depends on the resources available at the deployment location and the goals of the operator.

Out-of-Band Cache Architecture
In an out-of-band cache architecture the control plane and data plane of the caching system are separated. A route advertising protocol, such as the border gateway protocol (BGP) or static routing, is used to direct user Internet request traffic to a cache manager. At the cache manager, the user request is analyzed and based on an algorithm decision, a specific content request is directed to a cache server that has the object in storage to serve the object. In the event that the requested content is not available, the cache manager forwards the subscriber’s request to the origin and the content can flow directly from the origin to the requester. If the algorithm decides the content should be cached, it tells a cache server to retrieve the content from the Internet for the next user.  Cache managers are typically located in a centralized network location.

Cache servers are the file storage and delivery elements used in an out-of-band architecture to serve content to subscribers and to retrieve content from an origin. They are connected to both the cache manager and the Internet and may or may not be collocated with the cache manager.

The above descriptions are extremely simplified descriptions architectures used by operators to manage the explosion of OTT content on their networks. Operators are all bringing different goals to their CDN and caching network deployments and depending on exactly what the short and long-term objectives are, any of these architectures may be relevant. In my earlier post, I should not have stated that one architecture was better than another, as it all depends on what the carrier is trying to accomplish. There are various value propositions presented by vendors in the transparent caching space and as I mentioned in my earlier post, there are some key factors to consider when evaluating each of these architectures and vendors.

Eighteen months ago, almost no one was talking about transparent caching as operators were not yet serious about deploying these kinds of content delivery technologies inside their network. But if there was one thing we heard loud and clear from the carriers and telcos who spoke at the Content Delivery Summit last month, it's that they are now heavily investing the time and money to deploy transparent caching architectures, amongst other CDN platforms, and that the market for these services is going to grow very fast. I recently completed a study at Frost & Sullivan and we expect the market for transparent caching services to grow to nearly half a billion dollars in the next three years. I'll have more details on those numbers in a future post.

Call For Speakers Now Open for Streaming Media West, Nov. 8-9th in LA

New-SM-West-Logo The call for speakers is now open for the 2011 Streaming Media West show taking place Nov. 8-9th at the Hyatt Regency Century Plaza in Los Angeles. All submissions must be made through our website and the deadline to submit is June 30th. I typically get 10x the number of submissions that I can use, so please make sure to get your submission in before the deadline and if you are a vendor submitting to speak, your submission must include a customer.

I am always looking for moderators who want to help organize quality sessions at the show. If you want to be involved in that capacity, please email me directly with your background, what session topic you have in mind and the names of companies that you would like to have on your session.

Also, while I will be planning the conference agenda for the 2011 Streaming Media West show, I will not be able to attend the show in-person this year. As a result, I am looking to hire a few individuals who can help assist with the conference program on-site, making sure speakers are in the right rooms, sessions get started on time and assist in keeping things flowing smoothly. If you are interested in one of these paying positions, please contact me directly with details on your background.

We're in the early planning stages of the show, so if you have an idea, want to see us incorporate something you have seen at other shows, know of a way you want to be involved, or would like a place to organize a local Meetup at our event, now is the time to reach out and share your ideas.

Announcing New Conference: The HTML5 Video Summit, Nov. 8-9th in LA

HTML5_Video_SUMMIT_logo StreamingMedia.com is pleased to announce that in conjunction with the 2011 Streaming Media West show in LA, we will be hosting a new two-day event called the HTML5 Video Summit. This new conference will take the place of the Online Video Platform Summit and will be dedicated to covering the topic of HTML5 and video from a developers point of view. The two-day summit will feature one track that will give instructions on:

  • Encoding Video For HTML5; Building an HTML5 Video Player; Encoding Video for iDevices; Debunking HTML5 Video Myths; HTML5 And Web Video Standards; Video Advertising and HTML5; and much more!

The summit will also include a showcase portion of the event for content owners and developers to come present their HTML5 video related offerings and apps and demo what they have built. We're working on building the website for the summit now (www.html5videosummit.com) and will have more details online shortly. In the mean time, the call for speakers is now open for the HTML5 Video Summit and Streaming Media West show and you can submit your request to speak online.

We're looking to work with as many organizations as possible on the summit, so if you are part of a HTML5 developers group, standards body or news outlet that is dedicated to covering the HTML5 subject, we'd love to hear from you and see how you might want to be involved.

Free Giveaway: Win A Bundled Subscription To MLB.TV and At Bat 11

Mlb Updated: The drawing is now closed. Sean Dunn from NY, NY is the winner. Thanks to the folks at Major League Baseball Advanced Media (MLBAM), and in conjunction with our recent Broadband Device Pavilion, I'm giving away a free subscription to MLB.TV along with MLB.TV's iPhone/iPad app, At Bat 11. All you have to do is leave a comment on this post and one lucky winner will be picked at random on June 3rd. Good luck!

Testing the Apple TV, Roku XDS and Xbox 360, Plus 10 Other Devices

At the Streaming Media East show, I did a presentation that highlighted the pros and cons of about a dozen streaming media devices in the market including Apple TV, Roku, Xbox 360, PS3, Boxee, TiVo, Wii, Logitech Revue, Sony SMP-N100, Western Digital WD TV Live and Live Hub. My slides from that presentation are now available for download and video of my presentation is below.


The takeaway from my presentation is that Apple TV is the weakest box on the market today and the Roku XDS and Xbox 360 are the strongest. For those looking for a device that acts as a media center hub, then the Boxee Box by D-Link and the Western Digital WD TV Live Hub are the best choices.

As for who will own the market in the long run, it’s too early to say. But you have to have three things in the market in order to win: you have to have device penetration and more importantly device adoption; people actually have to use the device, not just buy it. Second, you have to have the platform: there has to be a way for you to access all this content and get to all this content. And third, you actually have to have the content available.

If you’re interested in seeing a device matrix of all the streaming media devices on the market, along with their tech specs, you can get a copy of that here.