Need someone to lead product or development at your software company? I lead product and engineering teams and I'm looking for my next opportunity. Check out my resume and get in touch.

CloudFront and the CDN market

Freshness Warning
This blog post is over 12 years old. It's possible that the information you read below isn't current and the links no longer work.

Amazon released CloudFront, their Content Delivery Network, earlier this week. It’s being touted by many as a game changer for content delivery services.

In PCWorld’s "Amazon CloudFront: No Threat to the Incumbents" Bernard Golden argues that Amazon’s CDN won’t hurt existing CDN vendors. Golden says that existing vendors have better products than Amazon offers and won’t find their larger clients moving to CloudFront.

He compares the CDN market to the automobile industry. Hyundai and BMW both sell cars, but obviously appeal to different segments of the market. People who buy the inexpensive option aren’t talking away from the luxury vendor. Lower-end cars expand an existing market by making autos accessible to more people.

That’s an inaccurate analogy, though. Cars aren’t commodities. There’s significant and obvious differentiation between different car brands. CDN delivery is quickly approaching the status of a commodity, where each vendor is offering a nearly identical product. There’s subtle differences in quality, but just like the bandwidth market, those differences aren’t appreciated enough by buyers to cause them to attribute significant value to them.

Existing CDN vendors have seen this coming for some time as is evidenced by the addition and bundling of premium services. They’ve attempting to make it harder to price shop by ensuring that the whole product they offer doesn’t have a perfect substitute in the market. If you can’t compare apples to apples, you can’t truly know how much of the total cost you are paying is for the delivery and how much is for the add on services.

Most CDNs currently charge up to $2.50 per GB if you have very low traffic. The more you deliver, the lower your prices, to the point that if you have massive traffic, your cost per GB will approach 2 cents. CloudFront destroys that low end of the market. Smaller businesses will have trouble justifying upwards of $1/GB when CloudFront provides an excellent alternative for $0.19/GB.

Golden says that at a really large scale, Amazon is more expensive than existing providers. Amazon’s lowest published rate is $0.09/GB in the US. Golden points out that in the existing CDN marketplace the largest users are able to negotiate lower prices. Data that I’ve seen from CDN vendors indicates that in order to get pricing lower than $0.09/GB you must use 750 terabytes of data each month. To get $0.09 from CloudFront, you only need to transfer 150 terabytes. Using the vendor numbers I have, it would appear that Amazon is less expensive until you’re transferring between 500 and 750 TB per month.

It’s likely that CloudFront will expand the CDN marketplace overall. Amazon’s lower initial prices, lack of long term commitments, lack of minimum purchases, and ease of implementation will help many smaller businesses start taking advantage of what a CDN has to offer.

(On a side note, this marks the first Amazon web service with a marketer-friendly name. Before CloudFront, we had geekier names like Elastic Compute Cloud (or EC2) and Simple Storage Service (S3). Does this signify the growing importance of AWS inside of Amazon?)

Recently Written

Domain expertise in Product Management (Nov 16)
When you're hiring software product managers, hire for product management skills. Looking for domain experts will reduce the pool of people you can hire and might just be worse for your product.
Strategy Means Saying No (Oct 27)
An oft-overlooked aspect of strategy is to define what you are not doing. There are lots of adjacent problems you can attack. Strategy means defining which ones you will ignore.
Understanding vision, strategy, and execution (Oct 24)
Vision is what you're trying to do. Strategy is broad strokes on how you'll get there. Execution is the tasks you complete to complete the strategy.
How to advance your Product Market Fit KPI (Oct 21)
Finding the gaps in your product that will unlock the next round of growth.
Developer Relations as Developer Success (Oct 19)
Outreach, marketing, and developer evangelism are a part of Developer Relations. But the companies that are most successful with developers spend most of their time on something else.
Developer Experience Principle 6: Easy to Maintain (Oct 17)
Keeping your product Easy to Maintain will improve the lives of your team and your customers. It will help keep your docs up to date. Your SDKs and APIs will be released in sync. Your tooling and overall experience will shine.
Developer Experience Principle 5: Easy to Trust (Oct 9)
A developer building part of their business on your product needs to believe that you're going to do the right thing for them and their customers.
Developer Experience Principle 4: Easy to Get Help (Oct 8)
The faster you can unblock a stuck developer, the better their experience will be.

Older...

What I'm Reading

Contact

Adam Kalsey

+1 916 600 2497

Resume

Public Key

© 1999-2020 Adam Kalsey.