CDN Consolidation: Velocix Sold, Vusion Shuts

For more than a year now we've been tracking predictions of a looming consolidation in the market for content delivery networks (CDNs), who are meaningful consumers of data center space. This week one of the more intriguing new players, Velocix, was acquired by Alcatel-Lucent. Meanwhile, 2008 startup Vusion (formerly Jittr Networks) has closed its doors and sold its intellectual property.

What's it all mean? IDC analyst Melanie Posey said Alcatel-Lucent's purchase of Velocix "brings a new, unique value proposition to network operators struggling to support their customers' demands for high-performance delivery of rich media content."

Rob Powell at Telecom Ramblings notes that the prize in the deal is the Velocix Metro product offering a "managed CDN appliance" to service providers. "The key here is that the product has always been targeted at Alcatel-Lucent’s customers, and therefore Alcatel-Lucent sees it as a logical extension to their business and an opportunity to use their substantial market leverage to sell a whole lot more of it than Velocix ever could," Rob writes.

Given that focus, Dan Rayburn wonders whether Alcatel-Lucent will continue to operate the Velocix network. "I don't see Alcatel-Lucent competing in the traditional CDN business with the likes of Akamai and Limelight since that's not what Velocix is truly set up to do and isn't a fit for who Alcatel-Lucent's customers are," Dan writes. "That said, no current Velocix customers will be impacted and all of the licensing deals Velocix has in place with customers like Verizon simply stay as they are."

And what about Vusion, whose customers were transitioned to Ooyala? "Vusion isn't the only CDN on the short list of those in trouble and we'll see a few more CDNs, mostly newer ones launched in the past twelve months, go under before the year is up," Rayburn predicts.