New CDN Cotendo Launches: Focusing On Application Delivery, Not Video

Cotendo, a newly formed CDN focusing on application delivery and dynamic site acceleration came out of beta this morning and launched their product offering into the market. I originally profiled the company back in October and since that time, Cotendo has raised a second round of funding in February for $7M bringing their two round total to about $10M. Backers include Sequoia Capital and Benchmark Capital.

While I would be the first one to say we don't need another CDN vendor to enter what is an already overcrowded market, Cotendo focus is not on video. While most other CDNs all want to fight over the same video business, Cotendo has developed a purpose-built CDN for app delivery, dynamic site acceleration, and a load balancing application for customers who have a multi-source CDN strategy. That's not to say that Cotendo can't delivery video, they are more than happy to handle HTTP based downloads, but they don't plan to target that business and aren't built for streaming or live events.

Cotendo is looking to address a segment of the industry that most CDNs aren't targeting today, app delivery, and a market that is only just starting to grow. The clear leader in the app delivery business is Akamai, which did a run rate of about $60M last year after doing $40M in 2007. The app delivery market is still very small, but has great potential for growth and has high margins, something very hard to come by with video delivery.

While Cotendo is well aware of Akamai's leadership position in the market, their expectations are pretty realistic. They plan to attack the "medium sized market" and go after strategic customers who understand the value of app delivery and small object caching. I really like their approach as they understand that for the type of content they plan to deliver, the real value to their offering is the software layer and not simply a bunch of boxes deployed on the network. Unlike video, app delivery and dynamic site acceleration requires a much more sophisticated level of flexibility and performance monitoring.