Is The CDN Pricing War For Real? (AKAM, LLNW)

Content delivery network business analyst Dan Rayburn has published preliminary results from his industry survey, which suggest that a CDN pricing war between heavyweights and smaller, cheaper rivals is not as intense as some think.

About 63% of his respondents say the pricing of their CDN contracts is the same as it was a year ago, while 22% say their contracts are up to 20% cheaper, 9% say their contracts are up to 40% cheaper, and 6% say their contracts are more than 40% cheaper y/y.

Rayburn concludes that “much of the ‘pricing war’ talk in the industry by analysts is overblown.” If accurate, this is good news for heavyweights Limelight Networks (LLNW) and Akamai Technologies (AKAM), which reported a stellar Q4 this week.

We’d add two caveats: First, big, important CDN clients often sign pricing contracts longer than 12 months, so it’s possible that many of the survey respondents are still on the same pricing contract they were on a year ago, and will be up for a new contract (with cheaper pricing) soon.

And second, Rayburn’s work is read widely among CDN clients and CDN executives. This is exactly the type of ballot box that industry-types would stuff with puffed up numbers in order to make their pricing look more attractive. We look forward to seeing more complete results from Dan’s survey.

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