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All respondents will be entered into a drawing for a free Apple iPhone 3GS. The winner will be announced on September 14, 2009. Last year we had over 1,000 companies fill out the survey and we're aiming for even more this year.

With Apple having already announced their plans to build its new $1 billion data center in Maiden, North Carolina, folks I have spoken to inside Apple told me that once the new data center is completed, Apple plans to have a more active role in doing their own content delivery.

While this won't be happening anytime soon, since the data center won't even be completed this year, it does indicate that over time, third party CDNs like Akamai and Limelight could very well lose a large portion of Apple's business. While it's way to early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we've seen Microsoft do over the years.

In 2007, third party CDNs delivered more than 95% of Microsoft's traffic. But only three short years later, Microsoft projected that third party CDNs will only account for about 40% of their traffic. While this might scare some investors into thinking that a new trend is taking place, whereby content owners start building their own CDNs for delivery, that's not the case. There are very few companies the size of Apple, Microsoft and Google who can spend hundreds of millions of dollars to build out a CDN with the scale and performance that they need, especially when it comes to video.

It is however something to keep a close eye on as we know that Apple has been a long time customer of Akamai and recently, started using Limelight as well. What we don't know is how much business is potentially at stake with these companies since neither of them will comment on their business with Apple or the size of their deals. But it's also something to keep an eye on for another reason. We keep hearing the CDNs talk about Blu-ray quality streaming and more HD quality video coming online and how it will help fuel the growth of their business. While I agree with them that it will help fuel the growth of the CDN industry, I disagree with them that it will be a catalyst anytime soon.

But what happens if Apple and Microsoft start producing higher quality content, like they will, yet start doing a lot of that delivery of it themselves? What impact will that have on the CDNs? While Microsoft and Apple clearly aren't the only two content creators who can help fuel the growth of the industry with higher quality content, they are two of the largest. It's something to keep an eye on and I expect we'll know a lot more details around this come next year.

Related Posts:

– CDN's Delivered 95% Of Microsoft's Traffic In 07', But Only 40% By Next Year

– What's The Barrier To Entry In The CDN Business? A Few Hundred Million

– Apple Moves To Dual CDN Vendor Strategy: Now Using Limelight With Akamai

Each year I write a featured story for Streaming Media magazine that takes a look at the future of the CDN market and what I expect to happen in the near-term. This article is from the Aug/Sept issue of Streaming Media magazine, which should be arriving in subscribers mailboxes this week. You can sign up for a free subscription to the magazine here.

As viewers consume more video, more often, for longer periods of time, at higher quality, and on more devices, the content delivery market is as hot as ever. In the past 2 years, we’ve seen the number of CDNs coming to the market jump from about a dozen to more than 50 at its peak (www.cdnlist.com), and combined, they have raised almost half a billion dollars. While all of this growth is great for vendors, content owners, and the industry as a whole, the reality is that the number of CDNs in the market is going to decrease a lot by 2010. The market is not big enough to support dozens of vendors. And even with all the new entrants in the market, you can count on one hand the vendors that have the vast majority of the market share based on revenue.

As we look to what the CDN market will be like 12 months from now, it’s clear that many vendors won’t be able to sustain themselves. The fact is, the CDN industry has been through this cycle before. In 2000, about 50 CDNs of all shapes and sizes existed. Two years later, in 2002, there were only about a dozen CDNs; in 2004, that number was only five or six.

Many people are predicting consolidation in the market. It will happen, but not in a positive way for most of the CDNs and the investors who pumped a lot of money into these companies. Most CDNs don’t have enough revenue, customers, patents, applications, or intellectual property to make them worth more money than they spent to launch in the market. We’ve already seen some CDNs such as Panther Express and Grid Networks run out of cash and be forced to merge with others—and more deals like this are on the way.

While some might suggest this will be bad for the market as a whole, I’ll take the opposite stance and say that having fewer vendors would actually be good. In any market, it’s hard for companies to get their messages heard above the noise when there are so many players all pitching the same services. This is especially true in the CDN space, where so many vague terms are used to describe services. The number of vendors that have flooded the market in the past 2 years is one of the main reasons the CDN industry is still so confusing for many. With fewer vendors, companies will be forced to refine their messages and be more transparent, and they’ll actually have to define a lot of the vague words such as “quality” and “performance.”

The bottom line is that today, the CDN business is not a profitable one for the vast majority of the vendors in the space. The only way for any CDN to be cash-flow positive is to take advantage of the economies of scale, which requires either an investment of hundreds of millions of dollars or becoming a CDN that is very focused and happy to go after a specific segment of the market, such as medium-sized customers or resellers.

While many vendors have talked about giving Akamai or Limelight a run for their money, the fact remains that fewer than five CDNs will make more than $50 million this year in total CDN business. (Akamai, Limelight, Level 3, CDNetworks) In order to become a real player in the CDN space and make more than $100 million in revenue, you have to spend two or three times that amount to build the business. While some companies are still in a position to spend that kind of money—e.g., telcos—the reality is that most CDNs will never raise enough capital to make $100 million a year in revenue. That said, not every CDN needs to be that large, and content owners need many different solutions in the market provided by small and large CDNs that fit different needs. But the real key point from all of this is that 12 months and even 24 months from now, a handful of companies will still control the vast majority of the market.

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I've been bombarded with calls and e-mails all morning asking me if I know anything about the the rumor that AT&T is looking to take over Akamai. For the record, I have not heard anything substantial and every few months we keep hearing a rumor like this. Funny thing is, you never seem to know where the rumor started or who it was started by. It seems that every quarter, for at least the past two years, rumors have circulated that AT&T, Cisco, IBM or Microsoft is going to take Akamai out of the market. Sure, it could always happen, (well not Microsoft) but I don't know of anything currently taking place.

Yesterday, Apple released an update to the Safari browser, version 4.0.3 that included stability improvements for webpages that use the HTML 5 video tag. I've downloaded and installed the update and do see a difference when viewing sites that use the HTML 5 video tag. In the past, Safari would often crash or hang for me but all seems good now. Anyone else notice a difference?

While many of us in the industry have been trying to figure out what exactly Google will do with On2 after the acquisition, we may be getting ahead of ourselves. Some On2 investors have filed separate lawsuits in New York and Delaware looking to block the acquisition, claiming that On2's board essentially agreed not to shop the company around and look for a higher price. Many of On2's investors are already banding together to stop the deal and have launched a website at Vote4On2.com to make their opinions heard.

While Google announced the deal would close in the fourth quarter of this year, they have yet to announced a date for when On2 shareholders will vote on the deal. Google has agreed to acquire On2 for $0.60 a share but the vast majority of On2 shareholders I have spoken to since the announcement think the company is worth a lot more than that and have said they will vote down the deal. With On2 on a run rate to do around $20M in revenue for 2009, Google's offering price of $0.60 a share puts the deal at $106.5M, or roughly five times revenue, which is not a bad multiple. While I don't know if On2 is worth more than Google is offering and am not a shareholder in any public company, from what I can tell, it sounds like Google may have a real fight on their hands from a large percentage of On2 shareholders.

As of April 7th 2009, there were 175,510,794 shares of On2 common stock outstanding and current directors and named executives only owned 6,001,222 shares, or about 3.33% according to a proxy statement. If all of the individual investors who have voted down the deal on Vote4on2.com do in fact own the number of shares they list, as of today they represent 37,716,990 shares or about 20% of the total outstanding shares in the market.

If there is one thing I have learned about many On2 shareholders in the past it's that they are very opinionated, do a good job of talking to one another and sharing info, are very aggressive in trying to get their message across and always seem to be up for a fight. Not something that works very well on a blog, but maybe just exactly the kind of thing needed to block the acquisition by Google or get Google to raise their offer price.

At midnight last night, Roku and MLB publicly announced that baseball fans who have a MLB.TV Premium account can now stream live and on-demand games to the Roku. For those in the Roku developer program, the MLB.TV app showed up a few weeks ago and we've all been eagerly awaiting to try it out. My Roku unit got the upgrade a few hours before it went live (thanks Roku!) and I got to spend a few hours testing out the interface and studying the video quality.

Like everything else on the Roku, the interface is easy to use with the MLB.TV app icon showing up on the home screen alongside Netflix and Amazon. Once you connect your Roku to your MLB.TV account via the computer, you then have the option of picking live games or those on-demand simply be scrolling through the date at the top of the Roku screen. All game match-ups are shown with team logos and when you select a live stream, you have the option of starting the game from the beginning or joining the game live in progress. Just like on the PC, you have the option of selecting the home or away feed and as expected, the same blackout restrictions that apply on the PC apply via the Roku. One thing that doesn't work on the Roku is the audio only stream when you are in a blackout area. For audio only streams, the Roku delivers you a message telling you to access the audio stream via your PC.

As for the video quality, it's really good. On a 50" plasma the quality is impressive and while not clearly as good as the HD broadcast TV signal, that would not be a fair comparison since the Roku stream maxes out at 3Mbps. While I noticed a slight lag at times and very slight pixelation, I would imagine that on a smaller TV, it would look even better. That said, the quality is really very good and I can't see any baseball fan having anything to complain about. The one thing I did notice that is different than watching a movie via Netlfix is that when you fast-forward any on-demand game, you don't get the little screen grabs at the top that shows you where you are in the video. I would imagine that since the screen grabs of a baseball game would look the same no matter what inning the game is in, it would be pretty useless as compared to a movie.

While I've always personally been a fan of MLB's video service, it's something that to date, you've always had to watch on your computer. Being able to move the experience to the TV, which is the whole reason I bought a 50" screen to begin with, really makes the experience that much better. Overall I can't find a single thing wrong with the offering and over time, I imagine the video quality will get even better as MLB continues to encode the games at higher bitrates.

While some have said the Roku box is simply too "dumb" to really be successful, since it can't play games or store content like some of its more expensive competitors, the fact it's still only $99 and does one thing really well is the whole reason why it can succeed.

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– Review: Hands-On With Amazon On The Roku, Close To 300,000 Units Sold

– Roku Adds HD Streaming, SD Upscaling, But Drives Netflix's Costs Up

– Roku To Stream Netflix HD Movies By End Of The Year

– Roku Capable Of HD Streaming, Netflix HD Content Only On Xbox 360 For Now