If you work for a Content Delivery Network (CDN) you might want to shop your resume at Google. Current CDN bandwidth rates are running between $1.60 and $.85 per Gig. That makes for a very tidy margin when buying commodity bandwidth at $.06-08 per Gig. With the introduction of Google Apps Engine pricing of $.09-.11 per Gig the game has just changed. Google is starting a bidding war with Amazon for the Platform as a Service (PaaS) market and the collateral damage will be the CDNs.
I recently reexamined the benefit of migrating our video storage and streaming from Amazon to one of the top CDNs but could not come up with a valid reason to increase my streaming costs by 500%. The classic argument from the CDNs is that with thousands of regional edge nodes, my content will be delivered quickly and locally. The reality is that quality of service in streaming services is often less about the number of hops to the server and more about the through-put of the last mile to the consumer. If there is a 250ms lag at the beginning of the connection but the stream stays connected during the live of the download it's transparent to the user but let that same video file start buffering and the customer is going to complain. Bottom line, the CDN brings one big value, the ability to scale to big loads if your content goes viral. We did the math, we can build out a nice scaling infrastructure and still have money left over on Amazon. Let's face it, most of our applications will never have 10,000 requests per hour.
The destructive cycle of technology always weeds out products with relatively high profit to value ratios. As the PaaS solutions come online, more developers will be able to access the low cost commodity pricing and it's going to drive down the value of CDNs significantly.