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Commentary: Edgix finds unique niche in content delivery

The company finds a unique content delivery strategy that complements rather than competes with content delivery leaders such as Akamai and Digital Island.

Edgix has found a unique content delivery strategy that complements rather than competes with content delivery leaders such as Akamai and Digital Island.

One indication of this is that Akamai and Edgix share a major backer in Battery Ventures.

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Akamai has identified content providers (large Web sites) as the market for its caching services. It uses the Internet to distribute the content to its caching locations. Edgix, on the other hand, plans to sell its services to Internet service providers, particularly in remote places such as Africa and the Pacific Islands, where Internet access is expensive and slow. Edgix places a Dell Computer caching server at a client ISP and uses a satellite link to deliver the cached information.

Satellites have some advantages over wired networks, especially when it comes to reaching remote locations. Building fiber-optic networks or running new wire to isolated locations becomes prohibitively expensive. These networks are also susceptible to accidental cuts, earthquakes and cable failures. Furthermore, as more people use the Internet, networks can become congested with traffic.

By partnering with satellite companies, Edgix allows ISPs to download and cache popular content without using up the expensive bandwidth that connects them to the broader Internet. Edgix' software serves as a kind of early warning system, determining what content is likely to become popular for an ISP's subscribers and allowing it to be cached and distributed quickly.

There are, of course, issues with Edgix' strategy. Although Edgix appears to have the satellite delivery side of content management to itself for now, satellite services providers would likely be happy to work with any number of players in addition to Edgix. Several satellite companies, such as Lockheed Martin, have the excess bandwidth to support this kind of service and could either enter this market themselves or sell their bandwidth to telecom companies or others that might want to compete in this market.

If Edgix has tuned and patented the broadcast delivery of caching information via satellite protocols, this is a potential barrier to entry for competitors, but it is unlikely to be a long-term differentiator.

The real question will be whether Akamai, Digital Island and other content delivery leaders find it worth their time to get this right on their own vs. simply acquiring or partnering with Edgix. The main protection that Edgix has from possible competition may be that this market is too marginal to attract other competitors.

META Group analysts Dale Kutnick, Val Sribar, David Cearley, Jack Gold and William Zachmann contributed to this article.

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