About three years ago, Apple started laying the groundwork for the build out of their own content delivery network. Fast forward to today and by my estimate, Apple has now moved about 75% of their traffic, by volume, to their in-house CDN. Looking at download details from the latest iOS 9.3 update shows Apple’s CDN was the primary method for delivering the update, with third-party CDNs like Akamai and Level 3 being secondary. [I first started seeing this trend with the release of iOS 8.]
And talking to suppliers that sell dark fiber, transit, wavelengths etc. it’s no surprise to hear just how much of these network services Apple has bought and the capacity they have put in place, including interconnections to the major ISPs. It’s amazing just how quickly Apple has taken such a large percentage of their content delivery to their in-house CDN, just as we have seen Netflix, Facebook, Microsoft and a few other big companies do. Apple is using their own CDN for iTunes, iOS and OS X updates, music streaming and a host of other assorted Apple content. In relying on their in-house CDN more, they are also time shifting releases so as not to spike their traffic with third-party CDNs, which is lowering the revenue that these CDNs use to see from Apple.
This all aligns with what we have heard Akamai say, which is that some of their largest customers have been bringing more traffic in-house, each quarter. And while Akamai has never said Apple by name, we know that is one of the companies impacting Akamai’s revenue, as well as Facebook. Timing wise, it took Apple about two years to bring what I would say was 50% of their traffic in-house, which is much faster than many thought possible. And for all the times a third-party CDN said things like, many customers can’t build their own CDN, or that it’s complicated, the fact is, for Apple, Facebook, Netflix and the like, it’s not difficult at all, it’s the norm.
Naturally, because what Apple and others have done, the question I get asked all the time, especially by Wall Street guys is who’s next to take a large volume of traffic away from third-party CDNs and move it to their in-house CDN? Right now, I don’t know of any other company, with a global audience and a lot of traffic, working to build out their own CDN. We do have some content owners in specific regions of the world, like Europe that now use their own CDN, (example: SKY), but these are only regional examples. For most content owners, even someone like MLB or NFL, it does not make sense for them to build their own CDN, as they simply don’t have enough traffic.
If you want to hear more about Apple’s CDN business, I’ll talk more about it during my presentation, on May 9th, at the Content Delivery Summit in NYC. Use code 200DR16 for a discount on your pass.
CDN provider Fastly is really on a roll right now, winning more business each quarter when it comes to value added services in the CDN market. With revenue expected to grow from $60M in 2015 to more than $100M this year, and having raised $75M in funding last year, the company is really firing on all cylinders. Content owners that are using Akamai for dynamic site acceleration keep asking me about Fastly and also commenting on the quality of their delivery, as well as how quick and nimble the company reacts.
