Cisco Buys Colo Space in 3rd Party Data Centers for New CDN Offering

Within the past week, two colocation companies have contacted me to say that Cisco (CSCO) is acquiring colocation space in various third party data centers in the U.S. for what Cisco is calling a new Cisco based content delivery network. While Cisco has operated a CDN of its own for over ten years, it's never been an external facing offering for other companies outside of Cisco's own personal use.

With Cisco already having its own colocation facilities, purchasing data center space from multiple companies, in multiple locations certainly sounds like the start of a content delivery network. And with all the talk lately of how important video is to Cisco's plans, it sounds like Cisco's quietly building out its own CDN with a desire to compete with the major players. While the companies I have spoken with are only talking about Cisco taking colo space in the U.S. for now, even a regional based Cisco CDN offering would be interesting.

If Cisco is in fact building its own CDN, you have to wonder why it doesn't acquire one of the major CDN players already in the market. Cisco has the cash and has not been shy lately in saying that it wants to do more acquisitions in the market. While Akamai (AKAM) may be too expensive for them, companies like Limelight (LLNW) and EdgeCast could be taken out of the market for what would be pocket change to Cisco. I also have to wonder how other CDNs in the market who buy Cisco gear for their networks would react if that vendor was then competing with them for the same delivery services they are selling.

A new CDN offering by Cicso won't be a disruptor in the market, but it would be an interesting one to watch. Cisco has the resources to be able to be build its offering for the future for when video based CDN services truly become a large business, doing over a billion dollars a year by 2011.

Disclosure: No position