Pricing transparency and CDNs

It is possible that I am going to turn out to be mildly wrong about something. I predicted that neither Amazon’s CloudFront CDN nor the comparable Rackspace/Limelight offering (Mosso Cloud Files) would really impact the mainstream CDN market. I am no longer as certain that’s going to be the case, as it appears that behavioral economics play into these decisions more than one might expect. The impact is subtle, but I think it’s there.

I’m not talking about the giant video deals, mind you; those guys already get prices well below that of the cloud CDNs. I’m talking about the classic bread-and-butter of the CDN market, the e-commerce and enterprise customers, significant B2B and B2C brands that have traditionally been Akamai loyalists, or been scattered with smaller players like Mirror Image.

Simply put, the cloud CDNs put indirect pressure on mainstream CDN prices, and will absorb some new mainstream (enterprise but low-volume) clients, for a simple reason: Their pricing is transparent. $0.22/GB for Rackspace/Limelight. $0.20/GB for SoftLayer/Internap. $0.17/GB for Amazon CloudFront. And so on.

Transparent pricing forces people to rationalize what they’re buying. If I can buy Limelight service on zero commit for $0.22/GB, there’s a fair chance that I’m going to start wondering just what exactly Akamai is giving me that’s worth paying $2.50/GB for on a multi-TB commit. Now, the answer to that might be, “DSA Secure that speeds up my global e-commerce transactions and is invaluable to my business”, but that answer might also be, “The same old basic static caching I’ve been doing forever and have been blindly signing renewals for.” It is going to get me to wonder things like, “What are the actual competitive costs of the services I am using?” and, “What is the business value of what I’m buying?” It might not alter what people buy, but it will certainly alter their perception of value.

Since grim October, businesses have really cared about what things cost and what benefit they’re getting out of them. Transparent pricing really amps up the scrutiny, as I’m discovering as I talk to clients about CDN services. And remember that people can be predictably irrational.

While I’m on the topic of cloud CDNs: There have been two recent sets of public performance measurements for Rackspace (Mosso) Cloud Files on Limelight. One is part of a review by Matthew Sacks, and the other is Rackspace’s own posting of Gomez metrics comparing Cloud Files with Amazon CloudFront. The Limelight performance is, unsurprisingly, overwhelmingly better.

What I haven’t seen yet is a direct performance comparison of regular Limelight and Rackspace+Limelight. The footprint appears to be the same, but differences in cache hit ratios (likely, given that stuff on Cloud Files will likely get fewer eyeballs) and the like will create performance differences on a practical level. I assume it creates no differences for testing purposes, though (i.e., the usual “put a 10k file on two CDNs”), unless Limelight prioritizes Cloud Files requests differently.

Bookmark and Share

About these ads

Posted on December 22, 2008, in Infrastructure and tagged , , , , . Bookmark the permalink. 3 Comments.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 9,844 other followers

%d bloggers like this: