They rode the big waves when the Internet was at high tide, and many of them wiped out once that tide ebbed.
Now, the remaining content-delivery networks are dealing with trends that may make the category name obsolete — even as they try to stay afloat in still-rough economic surf.
Content-delivery networks hit it big in 1998, when pioneer Akamai Technologies Inc. started to offer edge-caching services. The idea was simple — set up servers on the networks of major Internet-service providers to store clients' content, so when Web surfers nearby wanted it, it could be delivered more quickly.
But the sector suffered along with other Internet businesses during the new economy's recent crash. Among the short list of companies sucked into the market's riptide were Edgix Corp., Madge.web Inc. and Adero Inc.
The survivors now face challenges in a market that has expanded to include applications delivery — and as major players move to create in-house content-delivery networks.
While much has changed, the two top dogs in terms of business appear to be Akamai and the former Digital Island Inc. Cambridge, Mass.-based Akamai claims to have deployed 13,500 servers on 1,000 networks in 66 countries.
Akamai has seen a shift toward more business-critical content, according to director of product management Kieran Taylor.
"We've noticed a change in the market that e-business is now a must have — it's no longer a nice-to-have," Taylor said.
Its client base also has shifted. Rather than fly-by-night Web entertainment clients, Akamai now claims such government customers such as Amtrak, the Center for Disease Control and Prevention and the Federal Bureau of Investigation, and major corporate players such as Xerox Corp., Wells Fargo & Co., Yahoo! Inc. and Best Buy Stores Inc.
"We've seen extensive momentum in the enterprise space," Taylor said. "A year or two years ago, we had a lot of customers who were concerned only with performance. What we have noticed lately is that it's not just performance, it's protection."
To that end, Akamai has beefed up its flagship EdgeSuite service portfolio to include performance, uptime and protection guarantees. Its Site Shield product puts Akamai servers in front of a content owner's own server, thus acting as a deflector for viruses or denial-of-service attacks.
But the past year has not been kind. Akamai's stock has dwindled from a heady high of $345.50 in late 1999 to the $4 range. Though it was able to trim its fourth-quarter 2001 losses to $64.8 million — compared with $303 million in red ink posted during the year-prior period — it will miss its earlier breakeven target of the second quarter.
A big challenge is restoring confidence among wary potential customers, many of which have created their own content-delivery systems because they are uncomfortable with dependence on an outsource provider.
"Three years ago, outsourcing was the mantra in the analyst community, and a lot of people made the jump to outsource, and a lot of their providers are gone now," Taylor said. "So we're seeing a trend toward folks trying to take some of this infrastructure back in-house."
Digital Island — Akamai's chief rival — has also been battered. After enduring potentially fatal debt-load problems, it was acquired by British network operator Cable and Wireless plc in 2001.
Cable and Wireless — which claims that 28 percent of the world's Internet traffic travels along its global network — bought Exodus Communications Inc., a host-services provider that faced similar difficulties, earlier this year. It's since combined both acquisitions in North America, under the Exodus name.
Despite those woes, the prospects for content-delivery services are strong, said Exodus global director of entertainment and media Jim O'Brien.
"The health of content delivery is extremely strong on so many fronts, because frankly, as broadband utilization goes up with the continued popularity of cable modems and [digital subscriber line], that requires an infrastructure to deliver a reliable user experience," he said. "And that needs the infrastructure like we have."
Cable and Wireless' considerable bank account and Exodus' hosting services furnish the new operation with more firepower. It now sports 46 managed-hosting data centers worldwide, with 2,600 edge servers riding across 327 networks to reach 70 countries.
"The first obvious thing is financial viability," said senior product manager for content delivery services Kurt Merriweather. "One of the things that customers are looking for when they are partnering with a company is to make sure that partner is going to be around for a while.
"So we have taken those issues off the table, and some of our competitors are continuing to struggle with that very issue."
Exodus focuses mainly on the larger corporate client, including Sony Corp., News Corp. record label BMG Entertainment, American Express Corp. and The Walt Disney Co. Big corporations are using streaming delivery not only for content, but also for corporate training and distance learning for the increasing number of employees with access to a home broadband connection.
"Fundamentally, we are one of the key infrastructures that helps those with cable modems utilize that resource to learn things to enhance their careers, to receive entertainment in areas where that is not immediately available," O'Brien said. "There is a staggering level of interest and growth, especially in the corporate-educational and distance-learning area."
Like Akamai, Exodus sees a growing emphasis on security products. In the wake of Sept. 11, there's also an increase in disaster-recovery services.
The biggest sea change may be in what is delivered. Akamai and Exodus have both expanded their business from content to applications delivered to the edge of the network, and that's led some to wonder if "content-delivery network" is still an accurate label.
"We've moved beyond content delivery and now we are embracing something called edge computing," said Akamai's Taylor. "It really ties in with the whole Web-services movement that is occurring in the industry.
"So rather than just delivering objects for Web sites, we are now able to deliver applications from the edge of the network."
But such content also demands more quality than a streaming music video does.
"You need to be able to do that in a reliable fashion, because this isn't free content — this is something that somebody is paying $40 a download for," Exodus's Merriweather said.
While the problem of Internet transport snarls hasn't gone away, the CND market has shrunk, according to Jupiter Media Metrix analyst Matthew Berk. A raft of smaller companies now offer hardware and software alternatives to accelerate content delivery.
But it isn't necessarily doom and gloom for CDNs, Berk noted. There are some opportunities to add intranet and applications delivery, even if the demand for those products has yet to be proven.
"Their core competency, which is helping deliver content to customers closer to where they are — at least in a consumer setting, on the public Internet — is still, I think, very important. Nevertheless, their market is shrinking, so they have to evolve their business."