Unsurprisingly, Amazon is getting into the CDN business. (They’re taking notification sign-ups but it’s still in private beta.)

Content delivery is a natural complement to S3 and EC2. There’s already been use and abuse of S3 as a “ghetto CDN”, and at least one commercial hosting provider (Voxel) already offers a productized S3-based CDN. If you’re an EC2 or an S3 customer, chances are high that you’ve got significant static content traffic suited to CDN delivery. Amazon is just gluing together the logical pieces, and like you’d expect, your content on their CDN will reside in S3.

Basic content delivery services can practically be thought of as nothing more than value-added bandwidth (or value-added storage, if you want to think of it that way). Chances are very high that every major carrier, not to mention every major provider of distributed computing services (i.e., infrastructure clouds), is going to end up in the CDN business sooner or later.

GigaOm and Dan Rayburn have more details about the announcement, and come to similar conclusions: Despite how badly the stock market is beating up on Akamai in the wake of this announcement, this really has very little impact on them. I concur with that bottom line.

I noted last year that the CDN market has bifurcated. Amazon’s new offering is going to squarely target the commoditized portion of the market. Of the existing CDNs, it will impact Level 3 and the smaller no-frills CDNs the most. It will probably also have a minor impact on Limelight (which has a significant percentage of commodity CDN traffic), but basically negligible impact upon Akamai, whose customer base is tilting more and more to the high end of this business.

Just like EC2 and S3 have, this new Amazon service is also going to create a market for overlay value-add companies — people who provide easier-to-use interfaces, analytics, and so on, over the Amazon offering. I’d expect to see some of the existing overlay companies provide management toolsets for the new service, and it will probably prompt some hosters to offer CDN services built on top of the Amazon platform.

Amazon’s entry, combining an elastic model with what at this point can reasonably be considered proven scalable infrastructure expertise, constitutes further market expansion, and supports my fundamental belief that CDNs are increasingly going to entirely dominate the front-end webserving tier. Delivery is becoming so cheap for the masses that there’s very little reason to bother with your own front-end infrastructure.