AT&T to Roll Out CDN Services

AT&T ( T - Analyst Report ) has recently introduced its new cloud-based Content Delivery Network (CDN) platform. The launch comes close on the heels of Sprint Nextel’s ( S - Analyst Report ) decision to offer Managed Telepresence Services to attract corporate customers. It is also indicative of AT&T foray into the promising enterprise market.

The CDN platform involves a cloud computing system that stores data located at various nodal networks. This is make access to digital content like media files, software, documents, applications, live streaming media and database queries faster and better.

The new CDN service is expected to hit the market by the end of the third quarter and will be initially available to selected customers. In a cutting edge technology driven market, companies are increasingly looking forward to innovations to lure customers.

Accordingly, not only is CDN designed to deliver best-in-class digital media solutions, it is also attractively priced. Further, the company’s cloud-based networking system will ensure total security and reliability for content and business transactions.

Rapid increase in wireless devices like smartphones and tablets has created a huge demand for Web-based media solutions. Given the technological advancement that took place in the recent decade, people are now well versed with Web-based applications and are increasingly downloading online videos and graphics and practicing e-commerce.

Further, cloud computing has opened up new opportunities in wireless technology through its unique storage system in a virtual remote server. Simplified data storage solutions have enabled users to access data anywhere, anytime without downloading and installing applications on their own devices or computers, thereby, creating huge demand for such services.

Most of the technology providers like Akamai Technologies ( AKAM - Analyst Report ) , Level 3, Voxel and Limelight Networks ( LLNW - Snapshot Report ) are contending to tap the benefits of cloud computing through the cloud-based CDN platform and pose significant competitive threat to AT&T.

The global cloud computing market is currently estimated at approximately $37 billion and expected to hit $121 billion by 2015 at a growth rate of approximately 26%. Consequently, we consider it a significant platform for the CDN market that is likely to cross $5 billion by the end of 2013.

Currently, we maintain our long-term Neutral recommendation on AT&T, supported by a Zacks #3 Rank (Hold).