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Summary:

Video quality and service availability go hand in hand with improving financial performance for online video service providers. Datazoom is a startup that wants to make it easier for these companies to leverage data to improve operations and profitability. The underlying platform has significant potential that extends beyond video analytics into a variety of markets, including IoT.

Key Takeaways

• Datazoom has funding for a service that aims to make integration of analytics tools easier for online video service providers.
• Datazoom’s “data delivery network” has potential applications beyond OTT services. The company could move into gaming and IoT applications where latency impacts the ability to gather and analyze large amounts of data, for example.

Company background:

Datazoom was co-founded by CEO Diane Strutner and Jason Thiebeault. Strutner was previously the VP of Global Sales and Business Development at NicePeopleAtWork (NPAW), a provider of a video analytics platform. Thiebeault currently serves as executive director of the Streaming Video Alliance. Michael Skariah, formerly director of engineering at Ooyala, serves as the company’s CTO. The company closed a pre-seed round of $700,000, led by Brooklyn Bridge Ventures.

Details:

As it turns out, the integration process and the merger of data from dozens of disparate sources is a problem that is hard to solve for these companies. To solve the problem, Datazoom has built a data ingest and management platform. Datazoom’s Adaptive Video Logistics platform serves as an abstraction layer pulling data from this customizable SDK into the data ingest platform, enabling service providers to aggregate and time-align data from multiple sources in real-time.

Customers can choose which data needs to be signaled back to a data hub (meaning no wait for a response to an HTTPS request), and make changes or updates to the data collection or collection frequency at any time. Ordinarily, each SDK used for data collection adds significant (minutes) of latency; Datazoom says its method helps the analytics process because data is collected in a more uniform manner with sub 1-second latency (which is covered by an SLA).

Part of the cloud-agnostic infrastructure that enables fast data collection resembles a CDN – one that Datazoom calls a “data delivery network” –is currently hosted on AWS and Google Cloud, with Azure POPs coming soon.  On the other side of the equation, Datazoom has roughly a dozen integrations with data collectors (video and audience analytics tools, ad serving tools and the like), and says it is completing two to three more integrations each week as customer requests come in.

Value proposition:

By Datazoom’s count, there is an average of 14 tools used by major brands to capture data from video players. Now multiply that by the number of device types you are delivering to because you need to use a different player for mobile OS, a smart TV client, and a game console to deliver your service to consumers. That’s a bear to manage when it comes to deploying code on each client and contributes to bloat on the client that can impact device performance-one of the issues you were originally trying to solve.

As an example, some analytics services leverage logic in an SDK to do failover; this means when a stream degrades for a consumer, the player will automatically seek another source for the stream. Datazoom enables customers to leverage data from the player to do more than CDN switching; they can use different ad delivery, authentication and other systems as the situation dictates.

Datazoom aims to simplify the gathering of data not by bidding to be the one data stream to rule them all, but to move the integration point away from the player. 

Pricing for the SaaS offering is done by pricing based on a combination of the volume of data that is processed, and the desired SLA level for latency. Datazoom’s premise is that this will be a more predictable cost than basing pricing on the number of video views or sessions.

Market context:

By some counts, there are more than 200 video service providers in the global market. Datazoom is targeting the biggest names in the market because they have the biggest number of tools to integrate (think NBC Universal, Sony and such). Others in the space include Conviva, NPAW, and Cedexis. CDN service providers like Akamai have their own analytics offerings centered around network and delivery performance, with Akamai also offering web application performance monitoring through its Soasta acquisition.

Customers: Datazoom already has letters of intent from major brands and is busy conducting trials with a number of potential clients.

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Microsoft CEO Satya Nadella issued a memo to Microsoft employees recently – and we expect it is going to have as lasting an impact on the company as Bill Gates’ famous “Internet Tidal Wave” memo of 1995.

Entitled “Embracing our future: Intelligent Cloud and Intelligent Edge”, Nadella outlines a plan to reorganize the company around a vision of a ubiquitous distributed compute fabric that extends from cloud to ‘edge’ and infuses everything with AI.

Key Takeaways:

• Edge computing and AI are going to be essential technologies for this new version of Microsoft.
• Microsoft plans to invest $5bn in IoT products, services, and research over the next four years, further highlighting the shift of development focus to edge services.
• Microsoft is showing leadership in AI by working to ensure that it develops tools to detect and address bias in AI systems.

Details

Nadella has directed a team to be organized around what he called Microsoft’s “Cloud + AI Platform,” with the goal being the creation of an integrated platform across all layers of the tech stack, from core cloud services to edge services.

Within this organization are several specific units focused on AI, including:

• Business AI – focused on the internal application of AI
• AI Perception & Mixed Reality – A new team taking speech, vision, MR and related technology and build Microsoft products as well as cloud services for third parties on Azure.
• AI Cognitive Services & Platform (focusing on AI Platform, AI Fundamentals, Azure ML, AI Tools and Cognitive Services)

Perhaps less noticed, but of great significance is Microsoft’s move to address issues around the ethics of applying AI. As Facebook is learning the hard way, AI and ML applied to personal information can be misused, causing significant damage to society as well as its stock valuation.

Nadella is establishing the internal “AI and Ethics in Engineering and Research” (AETHER) Committee to ensure Microsoft’s AI platform “benefit the broader society.” Nadella promised to invest in strategies and tools for detecting and addressing bias in AI systems.

Windows won’t go away, but definitely takes a back seat in the “Experiences and Devices” team. The former leader of the Windows and Devices Group, Terry Myerson, is leaving Microsoft, and there are a number of other executive moves detailed by longtime Microsoft observer and journalist Mary Jo Foley.

Company background

Nadella has issued impactful memos before – following his 2014 company-wide email describing his vision of Microsoft as a platform company in a mobile- and cloud-first world, he cut 18,000 jobs as part of the most massive layoffs in the company’s history.

How does it company to Gates’ ‘Tidal Wave’ memo from 22 years ago? Gates’ memo was filled with more urgency, as the company was in danger of missing the internet wave;  Nadella’s latest memo is forward-looking in a different way, written from the perspective of a company that’s not far behind the competition. Still, Nadella recognizes that company’s structure and size could be a hindrance in adapting to the era of cloud and edge and has adjusted accordingly. It might not be as well remembered as Gates’ memo 20 years down the road but will be of no less importance as the industry fills out the role that edge services will play in the next two to five years.

Cloudflare is moving up in the market for CDN and security services. There’s no surer sign of that than a new partnership that has Cloudflare security and CDN services being offered via IBM.

Key Takeaways:

• Cloudflare’s deal with IBM shows the company is serious about continuing to expand in the enterprise market, and IBM is a good path to do that, even if IBM Cloud is smaller than the other players in the space.
• Cloudflare hopes to integrate into other IBM services, including the QRadar security analytics offering, and later the development of applications that leverage Watson for Cyber Security.
• The deal does not portend any significant change in IBM’s relationship with Akamai, but does represent Cloudflare’s increasing incursion on Akamai’s turf. 

Details:

Cloudflare’s portfolio of services will be offered through IBM Cloud, marketed as Cloud Internet Services. The services will be available via the IBM Cloud dashboard. The services go beyond the CDN services that IBM Cloud as well as other cloud providers have integrated into their IaaS offerings. Cloudflare’s portfolio includes:

Cloudflare services

Security	Performance	Availability
DDoS mitigation	CDN	Load balancing
WAF	Smart Routing	Rate Limiting
Bot detection/mitigation	Web optimization

Cloudflare has other services, but the table focuses on those services referenced on Cloudflare’s web page promoting the integration with IBM Cloud.

IBM is officially a Cloudflare reseller, meaning the services can be sold and deployed by IBM in any existing customer environment, including on-premise, hybrid as well as public cloud.

CloudFlare said the deal grew out of having IBM as a customer. IBM had been using Cloudflare for DDOS and WAF security as well as load balancing for the X-force Exchange business. X-force is IBM’s threat intelligence sharing platform.

Cloudflare’s ability to take this initial deal and expand into other parts of IBM sets the stage for other developments, including future integration of Cloudflare’s data set into IBM’s QRadar security analytics offering. Longer term, Cloudflare says it is looking to develop applications that leverage Watson for Cyber Security.

Company background

Cloudflare has been growing rapidly for several years, owning largely to its focus on the SMB market and numerous reseller deals with cloud/hosting providers. In 2017, there was a concerted push upmarket into enterprise accounts, and the company has significantly tilted its revenue mix towards that market, and the company reached milestones such as a $150m run rate and topping the 500-employee mark last year. 

Competition: 

Akamai is the largest CDN vendor and does a significant amount of business in security services like DDoS and WAF. Akamai is a long-time IBM partner, and just last year announced integration of its CDN offering with IBM Cloud. The deal does not, in our view, portend any significant change in the relationship.

Akamai said IBM is a significant reseller of its entire portfolio of services via the IBM Global Technology Services organization Edge Delivery Services branding. IBM’s Global Security Services organization also sells Akamai’s DDOS services and have integrated their Q-Radar SIEM with Akamai’s Kona security services. Additionally, Akamai was recently named IBM Watson Customer Engagement partner of the year for helping provide secure delivery of the Watson AI service and Watson API.

The Cloudflare deal is not exclusive; indeed, most cloud service providers (other than AWS) offer CDN via multiple vendors. Microsoft Azure offers CDN via both Akamai and Verizon Digital Media Services (EdgeCast). Google Cloud offers CDN Interconnect, which charges an fee based on egress traffic to CDN providers including Akamai, Cloudflare, CenturyLink/Level3, Fastly, Instart Logic, Limelight Networks, and Verizon.

Customers:

Cloudflare did say there are already joint customers who are using its services, including 23andMe, the genetics testing service.

One of the key challenges startups face is how to position their offerings in the marketplace against incumbent vendors. And what do many startups neglect to do when briefing industry analysts? Show a slide about the competitive landscape!

Presumably, executives have shown that slide to investors. For one thing, it’s important to show who you are selling to if you are trying to raise funding. VC’s want to see if you are selling to a large enough market to justify their investment, and to see how defensible your position is.

That’s why Steve Blank offered up the Petal Diagram as a way to show investors that there are multiple markets that a startup can sell to. Tom Tunguz, VC at Redpoint, recently wrote a counterpoint view that the Petal Diagram falls short in showing how a startup differentiates itself in a market. He suggests that the traditional matrix still works best for showing differentiation in established markets, while a pyramid diagram is effective for showing entry into a new market segment. In either case, a competition slide is essential for showing how the startup is going to win market share.

And yet, in my 17 plus years as an analyst, few start-ups ever included this slide when briefing me- I’d estimate fewer than 5% of companies in that time. Perhaps they were hoping that an unfocused sales strategy would go unnoticed, or that somebody would see that they were going straight up against a multi-billion dollar incumbent with little more a lower cost alternative.

Actually, I’m as interested as the investor in drawing a detailed picture of the competitive landscape. When I advise your potential customers and investors on who has an interesting, differentiated product and has a viable strategy for selling that product (or service), that advice comes out of knowing what the competitors are or are not doing.

In terms of a practical example, in the CDN market, there are several market segments that a company could compete in – media delivery, web performance (including dynamic site acceleration and mobile acceleration) and security. Even within security, one can argue there are multiple products, each with a different but slightly overlapping set of competitors. A petal diagram could be used to highlight a particular strength of yours. Or, as Tunguz suggests, a pyramid diagram could be used to show that your company is addressing the SMB market, rather than the hard-to-crack Fortune 500 space dominated by Akamai and a small handful of competitors.

Just make sure to show up to a briefing with a deck that has a competitive landscape slide, even if it’s just a tried and true matrix.

Around five years ago, “clouds” started to roll in to National Association of Broadcasters (NAB) show in Las Vegas in earnest. With a new record attendance of 107,000 people and companies like Google and Facebook vying for attention amongst the ‘traditional’ companies like Sony, Canon, Adobe and Avid, have we reached peak cloud?

Not hardly. Five years ago, the Hollywood feature film “Flight” was the first film to have all its visual effects shots (400 in all) rendered “in the cloud.” But rendering (which is the process of generating and displaying a photorealistic object) had already been something that film houses were doing off premise for years, even if it wasn’t called cloud, or done on a public cloud service like Amazon Web Services. But it does seem that the people involved in video production at the NAB show are deep into using cloud-based services, regardless of whether the video is delivered via terrestrial signals or the internet, and announcements from companies like Avid, whose partnership to move more of its applications to Microsoft’s cloud, are just the latest sign that move is a work in progress.

The presence of the major cloud providers Amazon (AWS Digital Media Solutions), Microsoft (Azure Digital Media) and Google (Google Cloud Media Solutions) at NAB is nothing new, but their show floor presence is more expansive than ever.

Google, for one, placed itself in the forefront-literally-with a significant booth presence in the South Hall of the LVCC where the tech vendors are congregated. Google has built up its digital media offerings through a number of acquisitions ranging from foundational technologies like DRM (Widevine, 2010) and video codecs (On2, 2010) to services such as digital rendering (Zync, 2014) and applications such as an online video platform for managing OTT video services (Anvato, 2016). In the case of Anvato, Google noted that it has moved Anvato onto Google Cloud Platform (GCP), and highlighted customers such as Scripps Networks Interactive, which is using Anvato and GCP to leverage machine learning to insert personalized, local ads into live video streams on the fly.

AWS is the gorilla of the cloud market, however, and is working furiously to be a big player in digital media. In media, symbolism and flash go hand in hand, and AWS sent a message by partnering with NASA to live stream 4K video (that’s UHD, or ultra-high definition) from the orbiting International Space Station using encoding technology from Elemental Technologies (acquired 2015) and delivered via Amazon’s Cloudfront CDN. Anybody on the planet with enough bandwidth and the required UHD screen could see the broadcast. How are traditional terrestrial broadcasters competing with that? Move production workflows and distribution to the cloud-that’s how.

Along those lines, one of the bigger announcements indicating the movement of content production to the cloud was Avid’s partnership with Microsoft. Avid, one of the main players in non-linear editing systems for filmmakers, will make Azure its preferred cloud computing partner for SaaS and PaaS offerings built on Avid’s MediaCentral platform, and the two companies will co-develop new offerings as well. Avid announced Al Jazeera as a client that has moved to an all cloud-based deployment of Avid services – enterprise pricing for a combined IT stack of compute through application is an attraction, but also the ability to deploy assets in any combination of on-premises and private or public cloud provides media companies a certain flexibility that might ease their anxiety about a path to cloud deployments.

Key Takeaway

Although Amazon is the dominant public cloud provider and has been working hard to build up a digital media services ecosystem, Microsoft is not to be counted out. It’s roots in the entertainment and media industry go back to the days where they worked to displace proprietary platform players like Silicon Graphics Inc.; the relationship with Avid was cemented in 1998 when it sold Softimage’s 3D animation and graphics production tools to Avid. Microsoft and Avid will be formidable players in the move to cloud-based media production. Having announced a partnership to have updates to Adobe Creative Cloud applications (including Premiere Pro) leverage Microsoft Azure as the preferred cloud provider, Microsoft looks well positioned to be a leader in the M&E segment of the cloud market. With the other major provider of video editing tool from Apple (Final Cut Pro) likely to take a DIY approach to compute infrastructure for the time being, Google will have a hard time forging into the high end of the video production ecosystem, but still has a shot at building a presence on the content management and distribution side with its ability to acquire and integrate technology.