I thought I was all done covering the Akamai HD webcast earlier in the week, but Tim Siglin, one of the writers over at StreamingMedia.com made a really good point about the webcast that I totally missed. During the webcast, Akamai said they can now deliver HD video to the iPhone, but as Tim points out, the iPhone isn't capable of getting HD content.

From Tim's Blog:

[I have nothing against Akamai in particular, but unfortunately some of the claims made can't be substantiated. One in particular struck me as key to the whole press conference. Leighton claimed that, "Today there's [sic] 50 million homes that have connected gaming consoles – or other devices – that are capable of displaying HD video, of getting it and displaying it into the home. Also, there's [sic] 45 million iPhones out there today capable of displaying HD video."

Let's take a look at the facts:

a). No one else has ever claimed that the 1st gen iPhone or even the iPhone 3G is capable of of HD playback, which is the only way to get to the 45 million iPhone number.

b) Even the claims that the iPhone 3GS is capable of displaying HD content are conjecture, as Apple does not allow HD playback on the iPhone 3GS (even 480p content can't be played back).

c) While everyone is doing "higher definition" for live streams to desktop Flash and Silverlight players, many are doing HTTP streams, and a few are doing true HD (480, 720, 1080i/p) to these same players, there are a limited number of companies doing true HD live streams via HTTP, which is where Akamai wants to tell its story. None are doing it to the iPhone, however.

The reason I say it is key to the whole press conference is this: if all Akamai is claiming is "higher definition" as its term for HD, there's no story here, since others are doing it. If they're claiming HD for the iPhone, there's a story here but not one they can support.]

Tim's absolutely right. The screen res on the iPhone, even the new one, is only 480 x 320 at 163 pixels per inch, that is not HD. How can Akamai claim it is? Tim made multiple requests to Akamai for more details and was provided with a copy of a document called "Akamai HD for iPhone Encoding Best Practices" that as Tim says, "states, on page 5, the best practice is to encode at a maximum size of 400 x 224 and a maximum bit rate of 864 kbps. Which one of these settings qualifies as HD content? You're right if you answered none of them as content encoded at this rate / size would be considered unacceptable on the desktop, and further undermines Akamai's claim of its HD network providing content owners with the ability to encode once and play out to multiple platforms/players."

So what does Akamai consider to be HD video to the iPhone? In multiple back and forth emails with them last night, (see all of them on Tim's blog) Akamai said, "we believe the following requirements should met for HD specific to mobile:

– HD source content
– Over industry accepted video standards
– Adaptive bitrate streaming technology
– At bitrates over 700Kbps
– At an appropriately high resolution for the device rendering the video

Akamai's definition of what HD is to mobile makes no sense. You can
have the best "source" you want, but that does not mean the output will
be good. As Tim says, "If I take Akamai's argument about their
definition of HD (which runs counter to Paul Sagan's opening comments
in the webcast) and ignore the arbitrary bitrate limit Akamai has set,
I can generate a 200kbps stream from the 1080p HD content I film at my
children's soccer game, and then call it HD".

If "industry accepted video standards" is one of Akamai's requirements, then what would Akamai classify as non-industry accepted video standards? Does Akamai mean over industry accepted video "protocols"? There is no "standard" in the online video industry, so no idea what that word from Akamai is defining? Standard what? There is no standard video codec, bitrate, aspect ratio, platform, player, etc….

I'm sure others have have a similar take on this, so the comments section is open and you should read Tim's blog post for more details on this whole subject.

Last Friday, a federal judge invalidated ten claims relating to Acacia Media Technologies family of patents on audio and video transmission and streaming media. The case dates all the way back to 2002 when Acacia filed suit against Echostar, DirectTV, Time Warner Cable and CSC Holdings, Inc.

For me, this patent fight with Acacia was personal when in 2004, the company came into the streaming media industry and started threatening universities, vendors, and content owners with legal action if they didn't pay up. Acacia put a target on our industry and threatened to try and derail our growth when they claimed to own patents that covered just about every form of online digital audio and video transmission. We took up the fight soon after and dedicated a whole section to it on our website to try and get the word out on what Acacia was doing. While it's taken five years, it's great to finally see these broad patents shot down in court.

While a few hundred companies did pay Acacia to license the patents before this ruling, I'm guessing they now wish they hadn't. But I know that for some small companies, they simply could not afford to fight it in court and it was cheaper for them to simply get a license. It's good to know that Acacia won't be able to force companies to do that any more, at least as it pertains to their online video patents.

Telecom Italia Sparkle, which operates networks in three major regional systems in Europe, the Mediterranean and Latin America will soon announce (Updated 10/1: Press Release of announcement) that they plan to enter the CDN business through a partnership with CDNetworks. TI Sparkle will resell all of CDNetworks suite of services I expect we'll hear more about this today or tomorrow.

Last week, John Milburn, President of CDNetworks International, gave me an update CDNetworks business and their plans to take the company public private. You can read that interview here.

In addition to TI Sparkle, you'll see another major carrier make an entry into the CDN market with an announcement early next week. For all list of the carriers and telcos that have entered the CDN market, check out www.cdnlist.com

KIT digital has agreed to buy NYC based The FeedRoom in a deal that will be announced by Monday. Employees of The FeedRoom will be moving from their current office to the KIT digital location on 5th Avenue. For KIT digital, this fits nicely into their plans of wanting to do more business in the U.S. since to date, most of their revenue comes from outside North America. Acquiring The FeedRoom gives them a U.S. based company that's been around in the industry for nearly ten years and has a nice roster of enterprise based customers.

I'll post more details of the sale when I have them.

Related:

– 3/09: The FeedRoom Launches New Website, Back To Focusing On Enterprise Video

– 3/08: FeedRoom Acquires ClearStory Systems: Content Management Still Evolving

Today, Akamai held their live webcast to talk more about their HD video platform announcement from this morning and worst of all, the actual webcast stream itself didn't work well in Flash. I got lots of buffering, almost never got more than a 398Kbps stream and even though I am on a 25Mbps FiOS line, many times, Akamai's network estimated my bandwidth to be only about 1.2Mbps. Clearly not the impression Akamai was looking to give folks.

Putting the technical issues aside, Akamai's entire webcast failed because they didn't answer any of the questions asked, other than to use a lot of marketing terms. Honestly, I'm disappointed with Akamai on so many fronts. Today, Akamai is still the largest CDN for video delivery based on traffic and revenue, yet they don't act like it. At a time when Akamai needs to be building their CDN business, their revenue is declining and they continue to lose market share. The market has shifted and Akamai refuses to shift and adapt to it.

This is a time when Akamai should be leading the market by telling us where it is going, what the current barriers are to growth and how they are going to go about getting their CDN business growing again. Instead, they spend a lot of time and effort to put out out a release and produce a webcast that gives us lots of marketing fluff. No real details, no real answers, no real vision. I just don't get it. I don't think anyone, including myself, thinks of Akamai as dumb. The folks over there are smart, yet, they seem to have lost all their vision for the CDN industry and their product offering.

While Akamai is a bunch of smart technology folks, it seems
no one at Akamai can price, package, productized, market and sell their CDN
services anymore. At no time on the webcast did Akamai explain to
content owners why they should use the service. They used a lot of
generic terms to say why it's great, but nothing that would make a
customer switch from one of Akamai's competitors. Customers want real
value propositions, not generic statements. Ask yourself, when you think of Akamai's CDN service for video, what message comes to mind? The "edge" story? The number of servers they have? That they are the biggest CDN? Where is their message? It doesn't exist.

The entire webcast was simply a sales pitch for Akamai where they made
sure they talked about all of the major buzz words and subjects. They
spent five minutes to tell us how their "edge" network is so unique,
which is the exact same story they have been talking about for the last
ten years. If it's so unique, why is their CDN revenue declining? This
is not the year 2000 anymore. Akamai needs a new marketing message and
can't keep going back to the old "edge" story time and again. Do they
really think that resonates with customers? If it did, then Limelight
and Level 3 would not be giving Akamai some serious competition for
their CDN business and not because of price. If Akamai's network was so
much better for video delivery, then customers would still be willing
to pay more for the service. The fact that many aren't willing to is
not a reflection of competitors offering lowering pricing, it's that
competitors have a service that is equal in performance for video and at a lower price.

While Akamai did take questions from the audience during the webcast, they didn't actually answer any of the questions asked. The first thing they acknowledged was that they know delivering video in HD means more bits and more cost. But instead of talking about their costs to deliver video with the new HTTP platform, which should be cheaper, and how they might help lower that cost for content owners, they chose to answer the question with no specifics. Tom Leighton addressed it by saying, "we've made a large investment in our HD network to minimize the impact of the cost on our customers". What does that mean? Please define "minimize".

Later, when Paul Sagan was asked about pricing, he spent 65 seconds talking about Akamai's history in working with customers, how their pricing today is cheaper than it was ten years ago, how the company has helped their customers scale and threw in phrases about video advertising, quality, broadband models and all sorts of other topics not relevant to the question. Can anyone at Akamai answer a very simple and straight-forward question with a simple and straight-forward answer?

Akamai also talked about video monetization, the growth of broadband, TV sized audiences and just about every other buzz phrase you can think of, yet none of that made any impact on the webcast. Akamai want's to keep talking about broadband adoption and the future, yet I have a 25Mbps connection today and they couldn't deliver me a 1.5Mbps stream successfully. Their CEO made a bunch of references to HD video initiatives by customers for 2010 and "beyond" but that's all Akamai seems to be talking about, the future. What about today? I get the sense that Akamai is sacrificing their business today for what business will look like in the future. Maybe they can do that. They have a lot of cash in the bank and aren't in any risk of going under. But while you want to look to the future, you also have to deal with what's taking place in today's market, something they are not doing.

I just don't understand the company. They have all the tools and advantages over their competitors to really grow their CDN business, even in the down economy, yet they can't seem to get out of their own way. Today alone I spoke to three content owners in regards to Akamai. Two of them contacted Akamai as they wanted pricing for new CDN services, but Akamai didn't respond. Both customers fit nicely into Akamai's sweet spot and spend six figures a year. Both of them commented that Akamai never responded to their requests for a call back and it took one of the content owners contacting someone he know who was friends with someone at Akamai just to get a response. The third customer I spoke to is someone who's contract is up and upon asking for better pricing, was only offered a 7% price reduction, even though Akamai's price is about 85% more than their competitors. And this is a customer spending hundreds of thousands of dollars a year.

When does Akamai make this stop? While do many of us in the industry still continue to hear from potential customers that Akamai does not return calls? How can a sales organization be run this way and be expected to grow revenue? After the clear decline in their CDN revenue, how can calls and emails to their sales team go un-returned? Ask anyone who has sent in an RFP to multiple CDNs and they will tell you Akamai is always the last to respond. Why can't the company make changes to react faster to the market? CDN sales is all about being fast and flexible, something Akamai still has not been able to accomplish.

Honestly, I just don't get it. This company completely baffles me when it's very clear what needs to be done to grow their business, but those steps aren't being taken. I don't get the lack of message coming from the company, the way they sell their services, the pricing they have or the lack of any sense of urgency on their part.

Akamai flat out owned this market at one time, but unfortunately for them, they are losing it when it comes to their CDN business. May not be over night, but we're all seeing the signs of what's taking place and I hope that at some point, Akamai puts a stop to it and takes the necessary steps to fix their CDN business.

Reminder: I have never bought, sold or traded shares in any public company, ever. I have no vested interest in the share price of Akamai or any other content delivery network.

This morning, Akamai announced what they are calling the "Akamai HD Network", and will, as expected, now be able to support Flash via a new HTTP based video platform. While Akamai also mentions Silverlight technology and the iPhone platform in the release, delivering that content via HTTP is something they were previously able to do.

While there is a live webcast today at 1pm ET to showcase the new offering, if Akamai does not lower their pricing for this new platform, it won't do anything to help their business grow. Watching video in HD quality is nice, but most content owners are not putting their content in HD today due to the added cost, not because of any technology limitation. The problem is cost, not scale, distribution or the CDNs not being able to support it.

Lets say a content owner is spending $5k a month right now to deliver their content in non-HD quality, encoding their content at around 500Kbps. Now they want to go to HD quality and have to start encoding their content at 1500Kbps. Overnight, the content owner has just tripled their bandwidth bill, without doing any additional traffic. While some might say that tripling the number of bits being delivered would get the customer a lower price per GB delivered due to more volume, for a $5k a month customer they might see a savings of 10-15% at most. Yet that's not going to make up for the 300% increase they just saw in their monthly bill.

Akamai knows this will be the number one question of content owners, yet there is no mention of it at all in the release. Instead we've got lots of marketing hype like "first platform to deliver HD video online to viewers using Adobe Flash technology, Microsoft Silverlight, and to the iPhone, at broadcast-level audience scale." Really? Defined how? Both Limelight and Level 3 support this, in fact, Level 3 has been supporting HTTP based Flash video delivery via a plugin their wrote for their caching network that ties into FMS 3.5 for some time now. They have been doing this before Akamai. So if Akamai is saying they are the "first" to have this, that's just not accurate. Now they may be saying they are first to have this at "broadcast-level audience scale", but don't define what that means.

The release then says they have the "only solution" and that they have a "first-of-its-kind streaming platform" that "enables content providers to deliver more HD content than previously possible." More marketing buzz words with no definition. And based on Akamai's release, I'm confused as to how they are comparing the experience. Early in the release they say the solution supports an "online experience that matches and complements HD television, " but later in the release Paul Sagan's quote says, "HDTV-like experience". Well what is is? Does it match HD television or not? Honestly, it does not matter. That's all marketing non-sense.

What will be interesting to find out is just how much Akamai is moving away from using Adobe FMS 3.5 servers. While Akamai may have done something like Level 3 did, coming up with a way to deliver Flash video via HTTP in conjunction with FMS 3.5, they also might have totally abandoned Adobe servers for the vast majority of this solution, which would not be good news for Adobe. While Adobe has a quote in the release, it's very generic since today, the Adobe server does not support HTTP streaming. Adobe's own server platform is basically getting passed over by CDNs who are developing and deploying their own technology to make up for what FMS is lacking, which is not a good thing for Adobe.

Whenever I read a release of any new product offering in the market, I try to think of it like a customer would. The release should tell me why I need the offering, what the value is, how it impacts my business and what it's going to cost me. While most releases don't include pricing, I'm willing to bet that during Akamai's 1pm webcast, they won't give out any pricing details at all on the new service. And with customers already knowing that Akamai's CDN is expensive, without them getting out in front of the pricing question, this release will mostly fall on deaf ears.

After speaking to various folks in the industry this morning, it appears that Akamai's announcement tomorrow could be the unveiling of a new HTTP based Flash delivery platform. While I don't know all of the details, there are a bunch of implications this could have on Akamai depending on how they plan to offer the service. Even if this is not announced tomorrow, it's very clear that Akamai has been working on deploying this new platform internally and will offer the service before too long.

Akamai's move to the HTTP protocol to deliver Flash video makes a lot of sense since today, the 3.5 version of Adobe's Flash Media Server does not support HTTP streaming and still has some instability, something many of the CDNs have complained about. This is something that's widely known amongst the CDNs and only a few weeks ago, Level 3 discussed the benefits they saw in deploying HTTP based streaming platforms over proprietary ones. While Adobe has not yet announced it, we do know that come next year, Adobe will have support for HTTP based streaming with their Flash Media Server.

For Akamai, deploying such a service makes a lot of sense since they can leverage all of their entire HTTP infrastructure and provide a better customer experience using standard protocols. While some might suggest this move will also allow Akamai to reduce their internal costs, since they would not have to pay Adobe a FMS license fee, that cost savings would be nominal to start. Within the past few quarters, Adobe has already been working very aggressively with many of the CDNs to reduce their FMS license fees. And with Akamai delivering more Flash video than any other CDN, clearly they already have very good licensing terms with Adobe. So while Akamai may see some internal cost savings, it won't be anytime soon and would not be drastic.

Over time, it could have a much bigger impact on Akamai's P&L since they could spend less on hardware and servers and leverage more of their already built HTTP infrastructure. When it comes to having to add more capacity and scalability, Akamai would be able to spend less to do so. As for how much less, there's no way for me to know, but it could be a significant amount for the company over the span of multiple quarters.

But the real positive impact this could have on Akamai is if they decide to lower their pricing in the market, based on them reducing their internal costs. If they don't change their pricing model, then this new platform, if announced tomorrow, won't have that much of an impact on their numbers and won't help them close new business. Yes, it will be easier for them to support, will enable them to leverage a larger portion of their network infrastructure and should help them reduce some of their costs over time. But that's nothing like the impact it would have if they came to the market with a lower priced service. They have to do something to jumpstart their M&E business again and this new service would be a great marketing message for them to rally behind.

The other important thing to remember is that without lowering their pricing, a new Akamai based HTTP platform really has no impact on the customer. Most customers don't know and don't care whether their video is being delivered via HTTP or RTMP. And since most of the other CDNs already charge the same price to deliver Flash streaming or Silverlight streaming, most content owners already pay the same price for both. While a HTTP based Flash platform is a big deal for Akamai internally, unless they find a way to make the value relevant to customers, most of them could care less. So the company has to be able to show the content owner a lower price, a much better level of quality that can be measured or some other value add to where customers are going to demand HTTP based delivery. Without that, this announcement is only relevant to Akamai internally, Adobe and folks within the online video industry who cover infrastructure.

I'm guessing there will be more to the announcement and I'm sure there are details I don't know. But whether or not such an offering by Akamai is going to be seen as a value to the customer is really all that matters. The bottom line anyone should care about is how does the announcement help content owners, what's the value and how will it help Akamai grow their CDN business.