Highwinds Lands $55M, Enters CDN Market

Written by Ryan Lawler

Tuesday, March 11. 2008 at 09:40 AM EDT 3 comments

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Highwinds Network Group Inc. announced the launch of its new content delivery network (CDN), along with new funding and some partners that will help it build out an end-to-end solution for IPTV distribution.

The company, which touts a "channel-centric" approach to content delivery, received $55 million in financing led by General Catalyst Partners and Alta Communications . According to Mark Hayes, Highwinds's vice president of marketing and business development, this funding came on top of $70 million in financing that the company has raised since being founded in 2002.

Before launching its CDN, Highwinds was largely a provider of multi-platform IP services, including transport and storage. According to Hayes, Highwinds built its IP services piece by scooping up companies with network infrastructure and then tying those network assets together.

Those buys included data centers and significant peering infrastructure, which Hayes says gives Highwinds a cost advantage in the CDN market: "One of the ways to lower costs is to have peering connections. The cost of delivery is about half of what our competitors' costs are."

In addition to the funding, the company is announcing Knack Networks and Digital Rapids as partners for the delivery of an end-to-end IPTV solution. The partnership will target professional media customers.

The agreement combines Digital Rapids hardware and software solutions for content ingest, transcoding, and delivery; Knack Networks IPTV management platform; and the Highwinds CDN. The resulting solution will enable the firms to offer a turnkey solution to content owners.

Highwinds says it will partner with third-party content aggregators and distributors that then resell its content delivery services. Hayes says the key to the partner strategy is that it tightly integrates with its partners and that it won't try to steal its partners' customers. Hayes claims that companies providing video management and other value-added services often have a problem with larger CDN providers like Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW) attempting to take customers away from them.

Stuart Ross, chairman of Knack Networks, says before working with Highwinds, his company could not find a CDN partner that was willing to deliver beyond best-effort distribution.

"We worked with every CDN in the business, hoping to find solutions. There was lots of interest and commitments but no real efforts to work with us from an R&D level," he says, but Highwinds was different: Engineers from both companies spent six months working on how best to deliver video over IP at a network level.