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The Costs of CDN and Streaming Services: 3rd Edition (Vendor Pricing and Customer Expectations)
StreamingMedia.com
This report summarizes the results of three research studies conducted in Q2 of 2005. It is intended to provide buyers of media delivery services with guidance on industry pricing, best practices, and engagement methodologies that can be used to balance CDN costs with required service levels.
The Study is focused on the motivations for purchasing streaming services, the specific components and pricing models used, and the net costs of outsourced streaming. Three related research projects contributed to the study including a Web-based survey that was administered via the Web site, forty four half-hour telephone interviews with IT decision-makers who manage streaming media services for their companies and a survey of CDN vendors regarding list prices and service capabilities including Akamai, Limelight Networks, Mirror Image, SAVVIS, and VitalStream.
This report tells you the two or three data points that you, as a buyer of CDN services, can give to your current or future vendor in order for them to be able to provide a baseline quote. It also explores the variables that impact the price, and the trade-offs available to you to increase or decrease your overall costs for media delivery services. It is intended to provide buyers of media delivery services with guidance on industry pricing, best practices, and engagement methodologies that can be used to balance CDN costs with required service levels.
Most importantly, this report will show you that, in the end, price is not the most important element. What you really need is flexibility. CDN prices have plummeted over the last three years and will continue to drop (although not as fast). With enough accurate information about the changing market, contract terms that reflect a still-evolving marketplace, and a healthy and productive buyer-vendor relationship, you can ensure that you can reach the price points at the service levels you need.
Key findings of the report include details on:
The Pricing Disconnect: Not surprisingly, there is a wide gap between what buyers of media delivery services say they are paying and what suppliers say they are charging. This is to be expected-buyers often overestimate their savings, and vendors want to protect their margins. This report summarizes both ends of the spectrum and also provides the actual market norms for prices based on actual contract negotiations from the last three years.
The Changing CDN Market: The media delivery market is undergoing rapid, dramatic changes. With Akamai's acquisition of Speedera in the spring of 2005, buyers are scrambling to find a viable 'number 2' vendor. This report provides a ranking of CDN vendors by buyers. Based on reputation, VitalStream and LimeLight Networks look to be the main contenders to fill the role vacated by Speedera. However, other vendors like AT&T and Mirror Image, and even software solutions like those provided by Kontiki have a chance to step up in this crucial post-consolidation environment.
Getting the Right Price: Buyers always say price is their primary consideration. But at what cost? Research results show how requirements relating to commit rates, uptime availability, security, and customer service impact the overall price.
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