The Global CDN market is currently growing rapidly in the Americas and is also expected to witness significant growth in the APAC and EMEA regions in the coming years. With a current net worth of US$ 3.35 billion, the market’s revenue is set to continue rising at a CAGR of 15.73 percent during the 2012-2016 period.
The basis of this growth is made up of four key drivers:
- High Server Availability
- Need for Efficient Utilization of Bandwidths
- Ability of CDNs to Facilitate Quicker Load Time
- Data Traffic Management Functions of CDN Technology
Despite these huge benefits however, CDN vendors can’t bet on a riding to high profits and success without first encountering some big road blocks. Particularly, the following:
- Unaffordability of CDN Solutions
- Inconsistencies in Content Accessibility
- Maintenance and Security Related Issues
Without a doubt the most significant of these challenges, is the first. CDN services are usually provided by third-party vendors, which generally levy high fees for the services that they offer. In addition, most deployments of large CDN solutions have hidden charges besides setup fees which is a huge. Naturally this is a huge deterrent for smaller companies who typically make up a big chunk of the end-users in network and IT related markets.
Fortunately, as the CDN Market becomes increasingly competitive, pricing pressure is lessening this problem—at least slightly.
For instance, until 2009 the market was dominated almost exclusively by Akamai. With no other CDN solutions in sight, the company had no problem establishing its customer base despite premium prices. However, with the entrances of peers such as Level 3 Networks, Limelight, and CDNetworks, Akamai has reduced its prices.
Indeed, all vendors in the market have significantly lowered their profit margins to improve competitively in the past few years and although CDN solutions are still anything but cheap, they are now in the budget-frame of more potential consumers.
Also supplementing the market’s drivers and offsetting its challenges are the following trends:
- Development of Content Delivery Clouds
- Increasing Market Consolidation
- Increasing Mobility
All things considered, even with the presence of some high-impact challenges on the horizon, we have little doubt that the drivers and trends we’ve mentioned will be more than enough to keep CDN revenues flying high in the foreseeable future. For this reason TechNavio is confident in advising you to keep the Global CDN Market on your “ones to watch” list!
For more information, view our 2012-2016 report on the Global CDN Market.
