Dan Rayburn, long-time CDN expert and EVP of Streaming Media, has claimed that Apple Inc. (NASDAQ:AAPL) started its own content delivery network and all the updates in iTunes software and OS X downloads are coming directly from Apple Inc. (NASDAQ:AAPL)’s own infrastructure. Apple was planning to launch its own content delivery network (CDN) for a while in order to deplete its dependency on third party content delivery provides like Akamai Technologies, Inc. (NASDAQ:AKAM) and Level 3. A sophisticated CDN was necessary for Apple because of the security reasons, speed and seamlessness. If this claim is true, it’s a massive blow to the third party content providers who had a huge user base.
Rayburn also said that Apple Inc. (NASDAQ:AAPL)’s CDN is not some temporary or a small scaled solution, it’s really big, complex and well fabricated, around ten times the capacity currently needed. Rayburn calculated that Apple Inc. (NASDAQ:AAPL)’s CDN has the capacity to transmit multiple terabits of data per second, which will speed up the software update process.
In the presence of third party CDNs, Apple had to pay for the direct route in order to avoid congestion and other issues during times of high volume traffic, such as when a new version of its operational system is released. Apple Inc. (NASDAQ:AAPL) reportedly, spent around $100 million on the development of its own CDN.
Apple Inc. (NASDAQ:AAPL)’s own CDN will mean a huge damage to Akamai Technologies, Inc. (NASDAQ:AKAM), a company in which Apple Inc. (NASDAQ:AAPL) invested $12.5 million, but sold its stake later. Akamai Technologies, Inc. (NASDAQ:AKAM) currently counts on Apple for nearly 10% of its business, therefore the new CDN might have a negative impact on it.