AT&T Tunes In for CDN Video Distribution

| Jun 26, 2008 | Internet/Managed Services - U.S. | Competitive Intelligence Report

| Analyst: Counse Broders

Current Perspective: Positive
Vendor Importance: High
Market Impact: Very High

Event Summary

June 24, 2008 -- AT&T unveiled its Digital Media Solutions, a suite of content delivery and digital media solutions designed to help companies package, deliver, and distribute video and rich multimedia Web content across their networks to the three screens: computers, televisions, and mobile computing devices such as the iPhone and the BlackBerry. The service covers content distribution and management, broadcast video, digital signage services, and solutions. AT&T is targeting companies across the spectrum ranging from multiple small office locations to multinational companies in industries including the media, financial, education, medical, manufacturing, and retail sectors.

Analytical Summary

• Current Perspective: Positive on AT&T’s official splash into the CDN and streaming media markets, because the company addresses weaknesses it had in the past. AT&T’s push with financial resources, its dedicated executive staff, and its support of media codecs show that the company has come to do battle for its share of the media delivery market.

• Vendor Importance: High to AT&T, as having a stronger play in the CDN and streaming media space could do well to help AT&T augment these other business lines such as hosting and application management to capture clients looking for a one-stop shop solution.

• Market Impact: Very high on the CDN and streaming media markets, because few players have seen a competitor enter this space with the financial resources that AT&T is committing. Even Akamai, which touts low latency and closeness to end users, faces a threat from AT&T’s last-mile access and its ability to position at peering points for off-network traffic. The move could also shake up the carrier space if other carriers feel the need to add or partner for CDN services.

Recommended Competitor Actions

• CDN competitors in general, after waiting for the ground to stop shaking, should recognize that a major new player has entered the space, and it will take a strong strategic review now of sales and marketing principles to determine how to compete effectively. This could range from adjusting price, to promotions to better product positioning and customer service efforts.

• Akamai, while it does remain in a strong position globally, cannot afford to sit back and continue to proclaim that its network-neutral position gives it the upper hand. AT&T has more sales staff, more financial resources, and a deeper array of solutions that pose a solid threat to Akamai’s future success if the carrier executes its strategy well. Akamai will need to move to strengthen its global reach and position itself as the key player for multinationals looking for global capabilities.

• Limelight should look at how it can partner and position itself with other carriers such as Qwest, touting itself as a having the technology and capability to help these players compete against AT&T without the capital investment that a carrier would have to make.

• Mirror Image needs to revisit its pricing and TotalValuePlan programs to determine other ways that it can stand out in the CDN market. It can ill afford to misstep at this critical juncture and it needs to distinguish itself from other players.

Recommended Competitor Actions

• End users considering companies for their streaming media solutions may find a lot of appeal with AT&T’s entry, especially those clients that are looking for mobility support, including iPhones, as AT&T has the depth of services to help in a wide variety of ways beyond just CDN solutions.

• Companies that are looking for international support should inquire with AT&T, as the company is targeting three primary regions (U.S., Europe, and Asia-Pacific), but prospects may need to consider others such as Akamai that have established global propositions.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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