Content delivery network (CDN) Cotendo has raised a total $39m from investors, following a third round of funding which raised $17m and secured partners Citrix Systems and Juniper Networks. Cotendo has strongly concentrated its CDN business on selling complete product packages, typically deemed 'value add' services, such as acceleration services for dynamic web applications, web and mobile content delivery, SSL, advanced DNS and cloud applications.
Cotendo has positioned itself well by launching with a business model squarely focused on higher-margin services in a market where CDNs are experiencing a margin squeeze, as prices for video delivery services continue to drop. Leading CDNs across the board are taking varying steps to combat the aggressive commoditisation of their business: Limelight has chosen to diversify its portfolio, investing in online video and games streaming platforms. Akamai has pursued a similar strategy to both Limelight and Cotendo, having diversified parts of its vast business into online video and adding value through package services.
The money raised will partly be used to fund Contendo's expansion to Asia-Pacific and Latin America, where strong growth in smart phone use has created opportunities for the company's mobile content acceleration services. Though Cotendo doesn't match Akamai in terms of scale, the company's niche app acceleration services bode well for it carving out some decent market share in the value added services CDN business, which as yet has not seen the kind of competition that the pure video delivery market has.
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