Cotendo, a new CDN backed by VC heavyweights Sequoia Capital and Benchmark Capital, has launched. The technical founders are ex-Commtouch; the VPs of Ops and Marketing are ex-Limelight. Cotendo is positioning itself as a software company (rather than an infrastructure company, per the market shift I blogged about a few months ago), but it’s not a software pure-play — it’s got the usual megaPOP-model deployment. However, they’re positioning themselves more as a fourth-generation approach.

Three things make this launch notable — an ADN service similar to Akamai’s (thus breaking the monopoly Akamai has had since the Netli acquisition), a global load-balancing solution beefed up into an arbitrage service (for multiple delivery resources), and real-time analytics. Plus, all of us CDN-watchers can experience a wry sense of relief to see that Cotendo, unlike practically every other CDN to launch in the last two years, is not focused on video.

Again, I apologize for what is essentially a news blurb, but since I expect it’s going to be a significant subject of client inquiry, I shouldn’t be giving away analysis on my blog. Gartner’s Invest clients are going to ask what this means in the e-commerce/enterprise space, and our mid-market IT buyer clients will want to know what it means for their options. Like usual, I’m happy to take inquiry. Also, more information about this will be going out in a research note.

First-generation CDNs use a highly distributed edge model, and include companies like Akamai and Sandpiper Networks (whose acquisiton chain goes Digital Island, Exodus, Savvis, Level 3).

Second-generation CDNs basically try to achieve most of the performance of a first-generation CDN without needing hundreds of POPs, aiming for just a few dozen locations. Speedera (eventually acquired by Akamai) is the best example of a CDN of this type.

Third-generation CDNs follow a megaPOP model — two or three dozen huge points of presence, which they hope will be highly peered. Limelight, VitalStream (acquired by Internap), and the new entrants of the past two years are pretty much all megaPOP CDNs.

Fourth-generation CDNs are very different. They are a shift towards a more software-oriented model, and thus, 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. Velocix (for their Metro product) and MediaMelon both reside in the fourth-generation space.

That gets us to the morning’s interesting announcement.

Conviva has come out of stealth mode with a powerhouse customer announcement — NBC Universal. Conviva is not a CDN in the traditional sense, but they’re part of the ecosystem for Internet video. Rather than owning delivery assets themselves, they’ve got a pure-play SaaS solution — a platform that can arbitrage resources from multiple content sources (multiple CDNs, data centers, etc.), as well as offer value-added services like real-time analytics and integration capabilities across those multiple sources. (From an ecosystem perspective, the closest analogue is probably Move Networks.)

What makes Conviva immediately notable is their ability to do real-time monitoring of the performance of every individual delivery, and seamlessly switch sources midway through playing a video, driven by metrics and business rules, thus allowing the customer to deliver consistently good-enough performance (i.e., a target of no buffering or other degradation) at the lowest price point, i.e., cost-arbitraged QoS.

I’ve been writing about the customer desire for control and the rise of the fourth-generation software “CDN” since last year. Conviva takes full advantage of the overlay model. I’d rate the significance of this launch on par with that of Netli’s (back in 2003), although obviously in a very different way.

Because it’s a particularly important launch, I know it’s going to be of substantial interest to Gartner’s Invest clients, and likely of significant interest to our media and telecommunications industry clients. As such, I’m refraining from blogging a detailed description or analysis of the company’s technology and strategy, its likely impact to the rest of the video delivery ecosystem (which goes beyond the CDNs themselves), and the more general impact of the conceptual shift that’s taking place with fourth-generation CDNs. If you have inquiry access, please feel free to use it. A note to clients will be published soon.

(Disclaimer: I was pre-briefed on this, and I am quoted in Conviva’s press release. As I almost always do, I wrote my own quote, rather than letting words be put in my mouth. As with all Gartner quotes in press releases, it is a statement about the market, and no endorsement of the vendor is implied.)

For many months now, CDN industry insiders have gossiped that Panther Express was in financial trouble. Panther was caught with the bad luck of mistiming the funding cycle, leaving them to try to raise capital at a point when the capital markets were essentially frozen. Moreover, a large percentage of their revenues were tied to no-commit or limited-commit contracts, and with CDN prices in free-fall for much of 2008, Panther was doubly screwed from the perspective of the money guys. As time wore on, the likelihood of an acquisition by either a rival CDN or a carrier wanting to get into the space became more and more likely — but the longer the potential acquirers could wait to pull the trigger, the more cheaply they could buy the accompany, especially since rumors of Panther’s financial difficulties were starting to scare off potential customers.

Enter CDNetworks, a global CDN based in South Korea, who in the last year has been aggressively trying to penetrate the North American market. CDNetworks acquired Panther Express yesterday, in a deal structured so that it merged its US and European-based operations with Panther. Panther’s CEO Steve Liddell (who has experience working with Asian-based companies through his past experience as president of Level 3’s Asia business) will lead the new entity.

Dan Rayburn has offered some numbers and claims the acquisition values Panther at about $5 million — which would be about one-quarter of its 2008 trailing revenues, and would leave me wondering how that compares to the book value of Panther’s deployed eqiupment.

I’ll simply say that, although I agree with Dan that this acquisition basically has zero impact on other players or on pricing in the market, I have a very different perspective on the acquisition itself, and carrier opinion of this space, and of the general market opportunity (especially in the context that CDN is much more than video), than Dan does. Gartner clients who want to talk about it, you’re welcome to schedule an inquiry with me.

(Sorry. I started to write a long and detailed analysis, and then realized that I was crossing the line on what Gartner views as acceptable analyst blogging, and what is full-fledged analysis that ought to be reserved for paying clients.)

A long-standing puzzle for myself and my various colleagues who cover application-fluent networking: Why don’t more SaaS providers adopt application delivery networks (ADNs), either via a service, or via application delivery controller (ADC) hardware?

Even if a SaaS vendor perceives their performance as being just fine for the typical US-based user, performance is often an issue in Europe, and frequently deteriorates sharply in Asia, especially China, and is erratic everywhere else depending on the quality of the country’s connectivity. (Change the names of the regions if the data center isn’t in North America.) Deploying an ADN helps to bolster performance for these users. And if it’s not cost-effective to do that for all users, why not charge extra for an accelerated service? (Yes, we understand that there are issues like “if we offer an accelerated service, are we implying our regular service is slow?” but really, that’s just a marketing issue. Performance can be a competitive differentiator and it’s also a revenue opportunity.)

Two interesting recent examples:

• Fog Creek’s CoPilot gets Akamai IP Application Accelerator service
• F5 does a China solution for its DevCentral portal

Yes, times are tough right now, so a SaaS company does have to evaluate the ROI carefully, but any SaaS provider with performance issues owes it to themselves to give this stuff a look. (And SaaS customers who have performance issues ought to be poking at their providers.)

My colleague Nick Gall pointed out an article in the ACM Queue that I’d missed: Improving Performance on the Internet, by Akamai’s chief scientist, Tom Leighton.

There is certainly some amount of marketing spin in that article, but it is nonetheless a very good read. If you are looking for a primer on why there are CDNs, or are interested in understanding how the application delivery network service works, this is a great article. Even if you’re not interested in CDNs, the section called “Highly Distributed Network Design” has a superb set of principles for fault-tolerant distributed systems, which I’ll quote here:

1. Ensure significant redundancy in all systems to facilitate failover.
   
2. Use software logic to provide message reliability.
   
3. Use distributed control for coordination.
   
4. Fail cleanly and restart.
   
5. Phase software releases.
   
6. Notice and proactively quarantine faults.
   

One niggle: The article says, “The top 30 networks combined deliver only 50 percent of end-user traffic, and it drops off quickly from there, with a very-long-tail distribution over the Internet’s 13,000 networks.” That statement needs a very important piece of context: the fact that most of those networks do not belong to network operators (i.e., carriers, cable companies, etc.). Many of them are simply “autonomous systems” (in Internet parlance) owned by enterprises, or which belong to Web hosters, and so forth. That’s why the top 30 account for so much of the traffic, and that percentage would be sharply increased if you allocated them the enterprises who buy transit from them. (Those interested in looking at data to do a deeper dive should check out the Routing Report site.)