Limelight Networks will launch a new version of their website tomorrow and one of the biggest changes the company is making is re-aligning all of their products, which will now be broken out based on services and verticals. You can see a screen shot of the new site below.

This is a smart move for the company and one that should have been done sooner. Customers don't buy products, they buy services and solutions and showcasing what business challenges can be solved by solutions, specific to a vertical, makes a lot of sense. It's how Akamai has been selling their services for years, by targeting specific verticals with specific solutions. In addition, Limelight Networks will also be dropping the work networks from their name marketing, and going forward will simply be known branding themselves as Limelight, a clear sign that the company is trying to move away from being thought of as just a CDN.

Here's how Limelight's services are now broken out:

The company also announced today that their Q2 earnings call will take place on Monday August 8th.

I didn’t have a chance to cover this when it happened, but on July 1st, Amazon announced they were lowering the pricing of their CloudFront CDN delivery service. By my count, this is now the fifth time Amazon has lowered their pricing since launching CloudFront in November of 2008. If you need any more evidence of just how quickly CDN pricing has declined, when Amazon’s service launched, the lowest pricing they offered on their rate card was nine cents ($0.09) per GB delivered. Today, their lowest rate card pricing is two and half cents ($0.025) per GB delivered and I’ve seen Amazon quote a penny ($0.01) per GB delivered for large volume deals. Here’s a chart of their new pricing and data tiers compared to their previous pricing.

Amazon also announced that customers no longer have to pay for any inbound data transfer and they introduced new pricing tiers for their high volume users for what they call “Reserved Capacity Pricing, classified as customers doing more than 5PB of delivery per month. While Amazon does not yet have the suite of services labeled as “value add” by other CDN vendors in the market, it’s pretty hard to argue with the fact that Amazon has helped commoditize the basics of storing and delivering video over the Web.

While Amazon does not break out their revenue for their suite of Amazon Web Services, including their CloudFront offering, based on my estimates and from having talked to others in the CDN space who know Amazon’s customers and traffic, I estimate that CloudFront will contribute about $75M in revenue to Amazon this year. If that number is accurate, it makes Amazon close to being the third largest CDN in the market based on revenue.

One thing Amazon’s revenue shows is that it takes any new vendor in the CDN space a long time, meaning more than 2-3 years, to get revenue into the $100M+ range. If Amazon grows their CDN business by 25% next year, which is a lot, it would have taken them 4 years to reach the $100M number. The same could be said for Level 3, based on their current growth. It took Limelight Networks five years to grow revenue from $20M to about $150M. Entering the CDN space takes a really long time, lots of money and is not as easy as some suggest. Back in 2009, Microsoft said it cost them “several hundred million dollars” to build out their CDN and bring about 70% of their traffic in-house by the end of last year.

While some are quick to say that Amazon is only competing for the commodity portion of the market and won’t compete with any value add services, think again. Amazon has some pretty ambitious plans for their AWS platform and a lot more services are on the way, including ones the market would classify as value add.

Two weeks ago, during a StreamingMedia.com webinar I moderated on the topic of Adaptive Streaming & HTTP Delivery, Cisco gave out some great details on managing adaptive bitrate resolution and encoding profiles. While I've included three of their slides below, the first slide really gives a great visual on what the aspect ratio or size of the video window should be based on the encoding bitrate and bits per pixel.

You can download all of Cisco's slides from the webinar as well as the slides from all the other presenters here.

Also check out these posts on the subject, "Comparing Adaptive HTTP Streaming Technology From Apple, Microsoft and Adobe" and "New Data Released On The Performance Of Akamai's HTTP-Based Adaptive Streaming Technology."

Over the last few weeks, numerous signs in the market point to Limelight Networks trying to finalize a deal to be acquired, or raise a large round of funding. While I don't have all the specifics, over the weekend I was able to confirm via a third party that Goldman Sachs, the largest shareholder in Limelight Networks, is working on a deal with Limelight that will drastically change the company and I expect it is an acquisition.

Within the past 2-3 weeks, Limelight has basically stopped talking to Wall Street and the company has yet to say when they plan to announce earnings. The company must put out earnings by August 9th, but as of now, still has not said when they plan to release. Limelight has been stalling as long as they can and while I'm hearing that a deal for the company is not done and no letter of intent has been signed, it sounds as if Limelight is close to a deal.

There is speculation that the company may raise another round of funding instead of being acquired, but my bet is on an acquisition. If Limelight reports good second quarter earnings and increases the percentage of their revenue that comes from value add services, it would not be a stretch for them to be able to get a high evaluation on that revenue. Companies in the industry that offer SaaS based platforms, like SalesForce.com, are currently valued at about 10x revenue. Last quarter, Limelight said 38% of their revenue was from value add, so if that number continues to grow, they could raise another large round based on that segment of their business.

If they raised enough money, they could acquired a leading company in the Data Management Platforms (DMP) market or a company that offers an end-to-end platform for managing data-driven digital advertising, which is essentially a targeting audience management platform. There are a handful of companies in the space doing this (Turn, Collective Media, eXelate, BlueKai) and some are on track to do more than $100M in revenue this year.  A platform like this would fit nicely into Limelight's offering and would add a lot of top line revenue to the company overnight.

While it's not unreasonable to think the company could raise another round, my bet is on Limelight getting acquired. Of course there have been rumors for years that both Limelight Networks and Akamai would be acquired by Google, Facebook, IBM and a whole host of other players, but most of the companies like those mentioned don't make any sense. What does make sense is for Verizon, Microsoft or AT&T to acquire Limelight for the following reasons.

Verizon recently launched their new Verizon Digital Media Services (VDMS) business and is focusing on the entire ecosystem for creating, ingesting, storing, managing, protecting, monetizing, delivering and tracking of content. The company recently said they don't plan to have the delivery component of their offering ready to go until Q2 of 2012, so acquiring Limelight would bring them to market much faster, not to mention give them access to a large library of content owners. Verizon would also get a whole host of technology around advertising and content management that their solution is currently missing. They could also take some of Limelight's service based platforms and re-position them within multiple segments of Verizon's business from wireless to enterprise. On many levels, Verizon would be one of the best fits for Limelight's current product offering.

While I don't think AT&T is involved in the discussions, the company could decide to stop spending the time and money to build up their offerings and instead, acquire Limelight and have what they need overnight. I don't think this will happen, but it's always possible. The company has changed their go-to-market strategy as of late and it's always possible they could take an even bigger approach. As for Microsoft, I'm limited in what I can say as I know some details that can't be made public, but I can reveal that Microsoft has been in discussions recently with Limelight about possibly licensing a newer version of the technology that Microsoft licensed from Limelight many years ago. And based on some other stuff Microsoft is working on, it might just make more sense for them to spend the money to acquire Limelight if they are going to have to pay for a license any way.

Of course some are going to suggest that these companies should just acquire Akamai instead since Akamai's has five times the revenue Limelight has. While that is always possible, Limelight could probably be acquired for around $700M and even with Akamai's share price being at about an 18-month low, anyone acquiring Akamai would have to pay in the billions for Akamai who currently has a $4.5B market cap. Limelight is much, much cheaper to acquire and their share price is also getting close to their 52-week low, so it's a good time for any potential acquirer. Many years ago AT&T offered $8 a share to acquire Limelight, but I was told Goldman turned it down. I get the sense that in today's market, Goldman would be more open to selling the company.

Last Tuesday was the biggest day for the acquisition rumor and Limelight's stock closed up $0.56 to $5 a share on more than 4M shares traded. Limelight has not had more than 4M shares traded in the company in more than three months. That alone is not evidence that something is about to take place, but clearly I'm not the only one hearing some details. I don't expect to hear Limelight announce anything relating to this on their Q2 earnings call, but I do think news will break in the next few weeks and we'll know for sure what they are up to.

Note: Even though I know Limelight would not comment, I did ask them for a response and was told, "Limelight does not comment on rumors or speculation."

Updated Aug. 2nd: Limelight says they will report earnings on August 8th

Content delivery network company EdgeCast announced yesterday that they are now powering more than 3,000 customers, serving more than 1.5 billion objects per hour and carry approximately 4% of all worldwide Internet traffic. I'm not sure how exactly these percentages are measured, but the last time I heard Akamai use the same metrics, Akamai said they were serving about 25% of the total Internet traffic.

Of course comparing Akamai to EdgeCast is not really fair since Akamai is doing over $1B in annual revenue and EdgeCast is slated to do between $50-$100M this year. However, EdgeCast is doing very well in the market when it comes to targeting mid-sized customers and carriers who license their CDN software. The company has grown very nicely in exactly three years and to date, and has only raised under $20M in funding. EdgeCast became cash flow positive in 2009 and confirmed for me today that they are still profitable.

I like to think of EdgeCast as the current "Speedera" of the industry and those of you who remember Speedera from many years ago will recall how the company was known for having great performance, great support and really affordable pricing.

Related Posts:

– AT&T Building Out Their Content Delivery Network Using EdgeCast's Software

– Telus Enters CDN Space With An Exclusive Reseller Deal With EdgeCast

– EdgeCast On A Roll, Launches In Latin America With Samba Tech

– Deutsche Telekom Enters The CDN Market, Partners With EdgeCast

– NaviSite To Resell CDN Services From EdgeCast

This morning, Google announced via their Google code blog that the company plans to offer a new product called Page Speed Service, which will help customers load and deliver their web pages faster. Google's Page Speed Service fetches content from the customer's server, rewrites their pages by applying web performance best practices, and serves them to end users via Google's servers across the globe. Google says while its Page Speed Service is currently being offered to a "limited set of webmasters free of charge", the company plans to charge for the service and says "pricing will be competitive". There are no details on when the service will launch, but I'm hearing it will be sometime in the fourth quarter.

How this will impact traditional CDNs in the market is too early to know without more details from Google on what exactly the service will support, but Akamai, Limelight, Level 3 and Cotendo in particular can't be too happy to see this. Google's service might not support content that's generated dynamically and we don't know what features and functionality will be missing, but clearly when Google plans to offer a service like this, they have the ability to disrupt the market.

I will update this post with more details when I get them.

This morning, Logitech announced their first quarter results and in addition to their CEO leaving, the company said they were cutting the price of their Revue unit to $99, down from the original $249 price tag. (As of the writing of this post, Logitech's website is still selling the Revue for $249 when you add it to your cart.) While Logitech has never said exactly how many units they have sold to date, the company did say that sales for the device totaled $5M in Q1 of this year, which would mean about 15,000 units sold in that quarter. Someone from the company also told me that they sold less than 40,000 units last year, so if you combine Q4, Q1 and Q2 sales, it looks as if the company has sold around 60,000 units to date.

While cutting the price of the Revue down to $99 now makes the device affordable, there still is not enough content available through the Google TV platform to make consumers really need the box. Google hasn't added a lot of new content to the Google TV platform since it launched and until they do, there is not a lot of incentive for consumers to use it. Currently, you can get Netflix, Amazon Instant Video (not Prime streaming), NHL, HBO Go and YouTube, but that's about it for mainstream content. Even the Google TV website doesn't really highlight what content is available for the platform, you have to go under the "spotlight" section to find a list.

If Google were to buy Hulu and start offering a YouTube Premium subscription service, that would make their Google TV platform a lot more valuable and bring some much needed content to the system. But until Google does something to bring a much larger selection of content to the platform, it's going to be very hard for Google to get a lot of traction in the market and Logitech is not going to sell many Revue units, even with the price being reduced to $99.

The real play for Google TV and the future of the platform is embedding it into TVs, something Google is well aware of and is working hard at. When that happens and more TVs on the market have Google TV built it, Logitech's Revue unit will really no longer be needed.

Related Posts:

– New Logitech and Google TV Product Display Shows Up At Costco, Still A Hard Sell

– Google And I Agree On One Thing: TV Is Not Dead