Content Delivery Market to Grow, Consolidate

Rawlson O'Neil King, theWHIR.com

June 1, 2001 -- (WEB HOST INDUSTRY REVIEW) -- As the U.S. economy slows, complex Web hosting firms must shift their strategies to accommodate growth in the content delivery sector.

As companies around the world face an Internet traffic bottleneck, creative hardware and software solutions that guarantee reliable delivery of content will become imperative, bolstering the demand for more sophisticated solutions.

According to a new report released by Frost & Sullivan (frost.com), the U.S. content delivery sector generated $905 million in 2000 and is forecasted to reach $12.1 billion US by 2007.

Content delivery is therefore a potential cash cow to Web hosting firms since such services are heralded by the Fortune 1000 for moving content closer to the end user, thereby ensuring a fast, guaranteed, and locally relevant customer experience.

A company that leverages the technology usually obtains value by rendering their content and e-business services through a multiplicity of secure, geographically distributed data centres. By using widely distributed Web serving technologies and carrier-neutral network connectivity with ensured quality-of-service, companies can increase Web site performance up to 10 times, regardless of demand.

Content delivery is also popular amongst the Fortune 1000 because it enables the speedy delivery of all major content types, including streaming media, authenticated content, and dynamic content. For this reason, hosting firms that specialize in content delivery systems have been growing their base of larger customers at a torrid rate.

Akamai Technologies (akamai.com), a large content delivery service provider recently won a contract to provide connectivity for the federal U.S. government.

Digital Island (digitalisland.net), one of the most popular content delivery service providers has racked up MSN (msn.com) amongst its roster of clientele.

The reason why these huge clients elect to purchase content delivery service is because it is a dependable, high-performance Web hosting platform that is secure, scalable, easily implemented and easily managed, despite its global implementation.

But despite the fact that these services offer many advantages, some in the enterprise market regard content delivery as a waste of resources. A growing number of enterprises, especially mid-sized companies are thus reluctant to spend capital for infrastructure improvements, especially on content enhancement, redundancy and reliability.

"Despite the opportunity, participants must educate their customers to realize the market's potential," says Frost & Sullivan IT analyst Jarad Carleton. "Profitability is back in fashion and failing to show the cost savings of a solution along with its performance enhancements could be fatal."

Frost & Sullivan believes that the best strategy for demonstrating the usefulness of content delivery is to roll out one-stop solutions. To eliminate confusion amid these markets, many hosting companies are looking to offer one-stop shopping for customers.

"Most participants in the content delivery market do not offer a complete solution and will find it necessary to either acquire the missing parts of the puzzle from other companies or to forge strategic alliances with them," states Carleton.

For this reason, it is not surprising that a content delivery provider such as Digital Island has recently elected to merge with the UK telco giant Cable and Wireless (cw.com). By merging in a deal worth $340 million US, the new company will strengthen offerings in key services such as content delivery, managed hosting and Internet services, thereby enabling it to offer full, turnkey e-business solutions for the enterprise.

Due to this development, expect Frost & Sullivan's predictions to be accurate. Anticipate more such consolidation within the content delivery space in the next few months.

About the Author
Rawlson O'Neil King is a managing editor and analyst at the Web Host Industry Review. Before joining theWHIR, Mr. King was Director of Corporate Communications at WebHosting.Com. During his tenure at Canada's most successful Web host, he established ineedsupport.com, the first branded destination customer care site in the shared hosting industry. He has prior experience as an IT consultant who served non-profit organizations, government and private industry. He holds a Bachelor of Journalism degree from Carleton University. Mr. King's column appears in theWHIR weekly.