3Crowd has unveiled its master plan with the recent launch of its CrowdCache product. Previously, 3Crowd had a service called CrowdDirector, essentially load-balancing for content providers who use multiple CDNs. CrowdCache is much more interesting, and it gives life and context to the existence of CrowdDirector. CrowdCache is a small, free, Java application that you can deploy onto a server, which turns it into a CDN cache. You then use CrowdDirector, which you pay for as-a-service on a per-object-request basis, to provide all the intelligence on top of that cache. CrowdDirector handles the request routing, management, analytics, and so forth. What you get, in the end, at least in theory, is a turnkey CDN.

I consider 3Crowd to be a fourth-generation CDN. (I started writing about 4th-gen CDNs back in 2008; see my blog posts on CDN overlays and MediaMelon, on the launch of CDN aggregator Aflexi, and 4th-gen CDNs and the launch of Conviva).

To recap, first-generation CDNs use a highly distributed edge model (think: Akamai), second-generation CDNs use a somewhat more concentrated but still highly distributed model (think: Speedera), and third-generation CDNs use a megaPOP model of many fewer locations (think: Limelight and most other CDNs founded in the 2005-2008 timeframe). These are heavily capital-intensive models that require owning substantial server assets.

Fourth-generation CDNs, by contrast, represent a shift towards a more software-oriented model. These companies own limited (or even no) delivery assets themselves. Some of these are not (and will not be) so much CDNs themselves, as platforms that reside in the CDN ecosystem, or CDN enablers. Fourth-generation CDNs provide software capabilities that allow their customers to turn existing delivery assets (whether in their own data centers, in the cloud, or sometimes even on clients using peer-to-peer) into CDN infrastructure. 3Crowd fits squarely into this fourth-generation model.

3Crowd is targeting three key markets: content providers who have spare capacity in their own data centers and would like to deliver content using that capacity before they resort to their CDN; Web hosters who want to add a CDN to their service offerings; and carriers who want to build CDNs of their own.

In this last market segment, especially, 3Crowd will compete against Cisco, Juniper (via the Ankeena acquisition), Alcatel-Lucent (via the Velocix acquisition), EdgeCast, Jet-Stream, and other companies that offer CDN-building solutions.

No doubt 3Crowd will also get some do-it-yourselfers who will decide to use 3Crowd to build their own CDN using cloud IaaS from Amazon or the like. This is part of what’s generating buzz for the company now, since their “Garage Startup” package is totally free.

I also think there’s potentially an enterprise play here, for those organizations who need to deliver content both internally and externally, who could potentially use 3Crowd to deploy an eCDN internally along with an Internet CDN hosted on a cloud provider, substituting for caches from BlueCoat or the like. There are lots of additional things that 3Crowd needs to be viable in that space, but it’s an interesting thing to think about.

3Crowd has federation ambitions, which is to say: Once they have a bunch of customers using their platform, they’d like to have a marketplace in which capacity-trading can be done, and, of course, also enable more private deals for federation, something which tends to be of interest to regional carriers with local CDN ambitions, who look to federation as a way of competing with the global CDNs.

Conceptually, what 3Crowd has done is not unique. Velocix, for instance, has similar hopes with its Metro product. There is certainly plenty of competition for infrastructure for the carrier CDN market (most of the world’s carriers have woken up over the last year and realize that they need a CDN strategy of some sort, even if their ambitions do not go farther than preventing their broadband networks from being swamped by video). What 3Crowd has done that’s notable is an emphasis on having an easy-to-deploy complete integrated solution that runs on commodity infrastructure resources, and the relative sophistication of the product’s feature set.

The baseline price seemed pretty cheap to me at first, and then I did some math. At the baseline pricing for a start-up, it’s about 2 cents per 10,000 requests. If you’re doing small object delivery at 10K per file, ten thousand requests is about 100 MB of content. So 1 GB of content of 10k-file requests would cost you 20 cents. That’s not cheap, since that’s just the 3Crowd cost — you still have to supply the servers and the network bandwidth. By comparison, Rackspace Cloud Files CDN-enabled delivery via Akamai, is 18 cents per GB for the actual content delivery. Anyone doing enough volume to actually have a full CDN contract and not pushing their bits through a cloud CDN is going to see pricing a lot lower than 18 cents, too.

However, the pricing dynamics are quite different for video. if you’re doing delivery of relatively low-quality, YouTube-like social video, for instance, your average file size is probably more like 10 MB. So 10,000 requests is 100 GB of content, making the per-GB surcharge a mere $0.02 cents. This is an essentially negligible amount. Consequently, the request-based pricing model makes 3Crowd far more cost-effective as a solution for video and other large-file-centric CDNs, than it does for small object delivery.

I certainly have plenty more thoughts on this, both specific to 3Crowd, and to the 4th-gen CDN and carrier CDN evolutionary path. I’m currently working on a research note on carrier CDN strategy and implementation, so keep an eye out for it. Also, I know many of the CDN watchers who read my blog are probably now asking themselves, “What are the implications for Akamai, Limelight, and Level 3?” If you’re a Gartner client, please feel free to call and make an inquiry.

EdgeCast has announced the beta of its new application delivery network service. For those of you who are CDN-watchers, that means it’s leaping into the fray with Akamai (Dynamic Site Accelerator and Web Application Accelerator, bundles where DSA is B2C and WAA is B2B), Cotendo’s DSA, and CDNetworks’s Dynamic Web Acceleration. EdgeCast’s technology is another TCP optimization approach, of the variety commonly used in application delivery controllers (like F5’s Web Application Accelerator) and WAN optimization controllers (like Riverbed).

EdgeCast seems to be gaining traction with my client base in the last few weeks — they’re appearing in a lot more shortlists. This appears to be the direct result of aggressive SEO-based marketing.

What’s important about this launch: EdgeCast isn’t just a standalone CDN. It is also a CDN partner to many carriers, and it is deriving an increasingly larger percentage of its revenue by selling its software. That means that EdgeCast introducing ADN services potentially has ripple effects on the ecosystem, in terms of spreading ADN technology more widely.

A lot of Gartner Invest clients are calling to ask about the AT&T deal with Cotendo. Since I’m swamped, I’m doing a blog post, and the inquiry coordinators will try to set up a single conference call.

I’ve known about this deal for a long time, but I’ve been respecting AT&T and Cotendo’s request to keep it quiet despite the fact that it’s not under formal nondisclosure. Since the deal was noted in my recently-published Who’s Who in Content Delivery Networks, 2010, someone else has now blogged about it publicly, and I’m being asked explicitly about it, though, I’m going to go ahead and talk about it on my blog.

There are now three vendors in the market who claim true dynamic site acceleration offerings: Akamai, CDNetworks, and Cotendo. (Limelight’s recently-announced accelerator offerings are incremental evolutions of LimelightSITE.) CDNetworks has not gained any significant market traction with their offering since introducing it six months ago, whereas these days, I routinely see customers bid Cotendo along with Akamai.

However, to understand the potential impact of Cotendo, one has to understand what they actually deliver. It’s important to note that while Cotendo positions its service identically to Akamai’s, even calling it Dynamic Site Accelerator (just like Akamai brands it), it is not, from a technical perspective, like Akamai’s DSA.

Cotendo’s DSA offering, at present, consists of TCP multiplexing and connection pooling from their edge servers. Both of these technologies are common features in application delivery controllers (or, in more colloquial terms, load-balancers, i.e., F5’s LTM, Citrix’s NetScaler, etc.). If you’re not familiar with the benefits of either, F5’s DevCentral provides good articles on multiplexing and persistent connections, as does Network World (2001, but still relevant).

By contrast, Akamai’s DSA offering — the key technology acquired when they bought Netli — is sort of like a combination of functionality from an ADC and a WAN optimization controller (WOC, like Riverbed), offered as a service in the cloud (in the old-fashioned meaning, i.e., “somewhere on the Internet”). In DSA, Akamai’s edge servers essentially behave like bidirectional WOCs, speaking an optimized protocol between them; it’s coupled with Akamai’s other acceleration technologies, including pre-fetching, compression, and so on.

Engineering carrier-scale WOC functionality is hard. Netli succeeded. There have been other successes in the hardware market — for instance, Ipanema, which targets carriers. Both made significant sacrifices in the complexity of functionality in order to achieve scale. Enterprise WOC vendors have had a hard time scaling past more than a few dozen sites, and the bar is still pretty low (at Gartner, we use “scale to over a hundred sites” on our vendor evaluation, for instance). A new CDN entrant offering WOC-style, Akamai/Netli-style functionality would be a big deal — but that’s not what Cotendo actually has.

Akamai’s DSA service competes to some extent with unidirectional ADC-based acceleration (F5’s WebAccelerator, for instance), but there are definitely benefits to middle-mile bidirectional acceleration, resulting in a stacked benefit if you use an ADC plus Akamai; moreover, this kind of acceleration is not a baseline feature in ADCs. Cotendo overlaps directly with baseline ADC functionality. That means the two companies have distinctly different services, serving different target audiences.

Cotendo is offering pretty good performance in the places where they have footprint — enough to be competitive. Like all CDN performance, customers care about “good enough” rather than “the very best”, but in transactional sites, there’s usually a decent return curve for more performance before you finally hit “fast enough that faster makes no difference”. This is still dependent upon the context, though. Electronics shoppers, for instance, are much less patience than people shopping for air travel. And the baseline site performance (i.e., your application response time in general) and construction, will also determine how much site acceleration will get you in terms of ROI.

The deal with AT&T is significant for the same reason that it was significant for Akamai to have signed Verizon and IBM as resellers years ago — because larger companies can be much more comfortable buying on the paper of a big vendor they already have a relationship with. And since AT&T’s CDN wins are often add-ons to hosting deals — where you typically have a complex transactional site — selling a dynamic acceleration service over a pure static caching one is definitely preferable. AT&T has tried to get around that deficiency in the past by selling multi-data-center and managed F5 WebAccelerator solutions, but those solutions aren’t as attractive. This partnership benefits both companies, but it’s not a game-changer in the CDN industry.

Since everyone’s asking, no, I don’t see Cotendo price-pressuring Akamai at the moment. (I see as many as 15 CDN deals a week, so I feel very comfortable with my state of pricing knowledge, especially in this transactional space.) What I do see is the incredibly depressed price of static object delivery affecting what anyone can realistically charge for dynamic acceleration, because the price/performance delta gets too large. I certainly do see Cotendo winning smaller deals, but it’s important that the wins aren’t coming from just undercuts in price — for instance, my clients cite the user-friendly, attractive portal as a reason to choose Cotendo over Akamai.

I have plenty more to say on this subject, but I’ve already skimmed the edge of how much I can say in my blog vs. when I should be writing research or answering inquiry, so: If you’re a client, please feel free to make an inquiry.

Interesting side note: Since publishing my Who’s Who note a week and a half ago, my CDN inquiry from customers has suddenly started to include a lot more multi-vendor inquiry about the smaller vendors. That probably says that other CDNs could still do a lot to build brand awareness. (SEO is key to this, these days.)