About two weeks ago I published an article entitled "Steps Internap's New CEO Could Take To Get The CDN Business Back On Track". In it I outlined steps I believe Internap (NASDAQ:INAP) should take to streamline its content delivery product offering which would enable the company to get its CDN business back on track. Internap's management read the post and last week contacted me to arrange a call where they could discuss my ideas and give me an update on the steps they are working on and have already taken regarding their CDN business.
While some of my conversations with Internap's CTO, Tim Sullivan, VP of Engineering, Steve Kiene, and VP of Marketing, Jim Leach was off the record, much of what we discussed about the company's CDN offering I can talk about. One of the overall themes I got from the call was that Internap has already streamlined its product offering, decided on what market it is going to focus on and has a CDN plan in place.
To me, it's very clear that Internap has put the legacy VitalStream technical issues behind it and is only looking forward to the service it delivers today and the steps it needs to take to grow its CDN business. I got a clear sense that the company's number one goal is to improve the functionality of its CDN offering, re-brand its product line, re-focus its marketing message and go after a very specific segment of the market.
In my blog post, many of the suggestions I made for its CDN business are already underway or in some cases have already been completed. For a long time now I have believed that Internap needs to sell its CDN services stand alone, without the need to have to bundle them with other non-CDN related services. Internap agreed that in the past, there was too much emphasis on the bundled offering and as result, the company missed out on much of the stand alone CDN business in the market. Going forward, the company's new approach will be to highlight to current Internap customers the value in the bundled offering while at the same time targeting content owners who only want CDN services. This is a good move for Internap and one that should enable it to get on the list for more RFPs that require nothing but content delivery services.
Internap took action in this area late last year by establishing a CDN only focused sales team. These CDN specialists are experienced and focused on selling just content delivery. This is a major shift from earlier days where all reps could sell any product offering, but none really focused specifically on CDN. Having experienced CDN reps out in the field enables them to have evangelists who are now championing Internap's CDN message to the rest of the industry. This process is only just underway and Internap plans to hire more experienced CDN sales specialists to increase its visibility in the market.
I was happy to be told on the call that Internap has officially exited the ad sales business and is working with partners for ad insertion into the CDN streams it provides. Through the acquisition of VitalStream, Internap had a legacy ad services portfolio that was primarily focused on ad insertion for customers who streamed radio stations on the web. Over the past few months, Internap finished moving the ad insertion offerings off of its network and no longer has any stand alone sales force selling advertising inventory. This is a smart move for Internap as the ad insertion technology was quite old and had many technical issues, not to mention, was not a fit with the rest of Internap's CDN offerings. The ad sales business wasted too many internal resources and never generated much in the way of revenue. Internap will still continue to provide CDN streaming services to radio stations and other music download websites.
While there are many CDNs in the market, Internap made it clear on the call that it is going to focus on different customers than Akamai (NASDAQ:AKAM) and Limelight (NASDAQ:LLNW) are going after. The company knows that to land huge customers like MLB or Netflix (NASDAQ:NFLX) you need to have tons of dedicated resources internally and need to grow the head count of your organization to a really large number. Internap is being very realistic in its approach to the market and is going to focus on medium size customers and ones who want to grow their business. This is crucial to Internap's success and at no time on the call did I get any sense that Internap does not fully understand the importance of this. From what I can tell, the company is setting its own expectations correctly which means it will be able to do the same for its customers.
On the subject of making Internap a fun place to work at once again, a point I brought up in my earlier post, Internap executives said that there are still many good people at Internap who like the company and enjoy their job. While that is what I would expect them to say, I did get quite a few e-mails, almost a dozen, from employees who work at Internap and contacted me privately after my post about two weeks ago. The vast majority of them said that Internap has some really smart people in the company and that they still want to work hard to get Internap back in shape. Many of them did say the mood has gotten better knowing they will get a new CEO and many are hoping that he will rally the troops and give them confidence that Internap can once again grow. So it does seem like the mood has become somewhat better and the new CEO could really take that up a notch very quickly with the right actions. Only time will tell.
Overall it was really good to hear that Internap now has a solid plan for its CDN business and something it can follow and work to execute on. While the company still has some work to do and has not yet re-branded its offering out in the market, this should happen soon and start to get the Internap name back in the spotlight for content delivery services. After the VitalStream acquisition there were simply too many legacy VitalStream employees involved and too many cooks in the kitchen. The CDN business strategy which is closely aligned with sales opportunities now falls under the responsibility of the VP of Engineering and it seems that internally, it's very clear who is responsible for what.
While a plan is always great, everyone knows that execution is the key to any company's success, a fact not lost on Internap. The company knows it needs to do more than just streamline its CDN offering and needs to continue to execute on the steps it has started taking. While it is too early to know what impact Internap's new CEO will have on its CDN business when he takes over next month, the fact he comes from Tandberg Television and has experience in the video market should only strengthen the company's efforts.
Disclosure: No position