us-russia business council webcast: demystifying russia online

CDNetworks, Inc. | All Rights Reserved. 1

Demystifying Russia Online Overcoming Challenges & Achieving Top Performance

Featuring the U.S. – Russia Business Council & CDNetworks

Live Air Date August 14, 2013


Randi LevinasExecutive Vice President

Jeff Kim Chief Operating Officer, Americas & EMEA

Meet Your Presenters


Agenda

• Russia Global Business Overview

• Russia Online Overview

• Russia Online Performance Challenges

• Russia Acceleration, Case Study Review & Key Learnings

• Q & A


Russia Global Business Overview


• Membership trade association

• Headquartered in Washington, DC with an office in Moscow

• Provide advocacy, networking, information services & more

• Mission is to expand & enhance U.S.- Russian commercial relationship

The U.S.- Russia Business Council


Russia Business - Attraction

• Abundance of natural resources

• Geographic position linking EU with Asian market

• Positive macroeconomic fundamentals

• 140M consumers

• Growing middle class

• Established consumer preference for Western goods & services

•Almost unlimited infrastructure needs

•WTO membership


Russia Business Overview

Largest labor force in the world

8thLargest economy in the

world (at market exchange)

Services = Biggest economy sector & account for 58% of GDP

In Europe for job creation, up from 6th

place in 2011

7th

#2

Sources: http://export.gov/russia/doingbusinessinrussia/index.asp , Rt.com, EY


Per capita GDP of all BRIC marketsHIGHEST

CDNetworks, Inc. | All Rights Reserved. 8© 2012 Forrester Research, Inc. Reproduction Prohibited

Russia

Brazil

China

India

$14,300

$12,000

$6,000

$1,500

GDP Per Capita – Russia Leads the BRICs

Source: International Monetary Fund



Russia Business Overview: The RegionsBashkortostan

• Population: 4 million• Major Industries: Oil & gas, refined products, petrochemicals, metals

Kaluga• Population: 1 million• Major Industries: Automotive components, construction materials, pharmaceuticals

Rostov• Population: 4 million• Major Industries: Agriculture, food processing, transportation

Stavropol• Population: 2.3 million• Major Industries: Energy, food processing, petrochemicals, tourism SEZ

Tatarstan• Population: 3.8 million• Major Industries: Oil, machine building, petrochemicals, Alabuga SEZ

Ulyanovsk• Population: 1.3 million• Major Industries: Manufacturing, food processing, Special Economic Port Zone


Skolkovo• Located on outskirts of Moscow• Special legal, regulatory, tax & customs regime• Created to encourage development of innovative industries• Major U.S. companies involved in the project include Boeing, Cisco, Dow, GE, J&J & Microsoft • Skolkovo will receive $4 billion in federal funding from 2013-2020

Technoparks• Russia has 5 federal Technology Special Economic Zones & a multiple regional technoparks• Include business incubators & like Skolkovo, have special tax, customs & regulatory regimes

Concerns• Viability of a top-down, government driven innovation approach• Russia must also deal with structural issues that stifle innovation, like IPR protection (though

this is improving), access to venture capital, etc.

Russia Business – Innovation


Russia’s Import Profile: 1H13

Sources: TradeStats Express, RF Federal Customs Agency

Import Partners

EU China UkraineBelarus U.S. All Others

Russia’s Top Imports • Machinery• Vehicles• Pharmaceuticals• Plastics• Semi-finished metals• Agricultural products• Science and medical

instruments• Iron and steel


2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1H12 1H130

2

4

6

8

10

12

U.S. Exports to Russia ($bln)

U.S. exports to Russia in 2012, totaled a record $10.7 billion, a 29% increase over 2011 levels

Russia Business – U.S. Exports to Russia

Source: http://export.gov/russia/doingbusinessinrussia/index.asp

Main U.S. Exports to Russia• Transportation Equipment• Machinery• Chemicals• Computers/Electronics


Russia Business – Financial Markets

2007 20120

50

100

150

200

250

Debit Credit

Credit & Debit Card Growth, 2007-2012

Sources: VISA, FT.com


Russia Business - Spending

60%Of 2013 Pre-Tax Income

Spent on Shopping

Highest% in Europe

00%

10%

20%

30%

40%

50%

60%

70%

2004 2005 2006 2007 2008 2009 2010 2011A

$500 $500 PPP

% of Population with Monthly Disposable Income Over $500

Source: Citi


“Russia’s top priority is to create the conditions for

sustained economic growth”

-President Vladimir Putin


Russia Business Overview – Key Takeaways

• Russia has great potential for growth

• After a lackluster first half of 2013, there is optimism for an acceleration in second half of year

• Infrastructure development could unlock regional markets

• Russia’s potential in innovation sphere is a clear advantage over many of its emerging market peers


Russia Online


About CDNetworks

• Global Cloud Acceleration Network

• Transforming the Internet into a secure high performing application delivery network

• Trusted partners in local markets

• Experts on extending into global markets


CDNetworks Global Cloud Acceleration

• 140+ Points of Presence in 80+ Cities - 13 PoPs in Russia• Global partnerships with Megafon, KDDI & SAP

Russia PoPs• Pskov• Petrozavodsk• Moscow• Rostov• Krasnodar• Samara• Perm• Chelyabinsk• Tomsk• Novosibirsk• Khabarovsk• Kazan• Yekaterinburg


Russia Online – Interesting Facts

ONLY HALFOf the adult population is connected

7M

67M+

Facebook Users3

& 7M Twitter Users2

Internet users3

FREE WIFI

In almost every café, bar & hotel

69%Of all online purchases are paid by COD

~80% Of 1st online purchases are made on couponing websites4

70%Of online travel bookings are still accompanied by phone calls or letters to customer service

Russian officials refer to the Russian Language Internet as:

RuNet

14M+ISPs ranking 10th in the world 5

2012Became the biggest online market in Europe 6

2ndRussian is the

Most used language on the web 7


Russia Online Opportunity

Source: New Media Trendwatch


Russia Online Performance Challenges


Russia Online Challenges - Cash Payments


Russia Online Challenges - Firewall

• Anti-piracy law

• Blacklisting Bill 89417-6

• Illegal Content (gambling)


•Outside of big cities internet access troublesome

•Satellite internet connection too expensive

•Lack of system monitoring tools

•Packet loss

Russia Online Challenges - Availability


Internet RTT Latency• Distance• Speed of light

50 ms

150 ms

San Jose

London

New York

500 msMoscow

OriginDatacenter1

Network Problems• Network-of-networks bottlenecks• Packet Loss• Congestion• Retransmission

2

Inefficient Protocols /RTT Multiplier• Chatty protocol: build, tear down,

negotiate connections• TCP Slow start• Tens of back-&-forth round trips• 30-50 RTTs common for 1 page• Connection Load at Origin

3 Many RTT for connection negotiation

Few RTT for actual data/payload transmission

Russia Online Challenges


Wash

ington

Philadelp

hia

Atlanta

Toro

nto

Los A

ngeles

Dublin

Amsterd

am

Vanco

uver

Dortmund

Hamburg

Berlin

London

Vienna

Milan

Madrid

Moscow

0

0.2

0.4

0.6

0.8

1

1.2

Russia Online Challenges – Speed (Latency)Site performance degrades as distance increasesMore distance Higher latency Longer RTT Slower download Slower page load

Source: Compuware Gomez backbone agents

Time to Download 24kB Object from Origin in Washington, DC USA

3x Slower

5x Slower

9x Slower

12x Slower!


Russia Online Challenges - Speed Matters“…faster sites don’t just improve user experience, recent data shows that improving site speed also reduces operating costs. Like us, our users place a lot of value in speed — that’s why we’ve decided to take site speed into account in our search rankings”

- Matt Cutts, Google S/W Engineer on Google’s Webmaster Central Blog


Found that a reduction in page load of 400ms caused a 5-9% drop in traffic

Found that a 1 second delay in load time led to 2.8% drop in revenue - A 2 second delay saw revenue fall by 4.3%

Published a study that showed when a slight delay was added to web searches – as little as 1/10th of a second – searchers used Google up to 0.6% less

Also found increasing load time of the page from 400ms to 900ms – led to 25% reduction in traffic

“…Instead of wasting time on keyword meta tags, you can focus on some very easy, straightforward, small steps that can really improve how users perceive your site”

- Matt Cutts, Google S/W Engineer on Google’s Webmaster Central Blog

Found a 100ms of delay reduced revenue by 1%

Found that speeding up their website by 5 seconds increased their conversion rates by 7-12% and doubled # of visitors from search engine traffic

Russia Online Challenges - Speed Matters


Russia Online Challenges – Security Attacks

Attacks cause direct financial losses to businesses of all sizes. ARE YOU PREPARED?


Russia Online Challenges – Security Attacks

March: 100's of millions of people in Europe affected by series of "bazooka" attacks . The attack broke record at 300 Gbps 1

April: Attack capacities increase to 10 Gb/s & above 4

April: Attackers for 3 days attacked the website of "Novaya Gazeta“. The attacks were so powerful that they briefly locked channels for some large providers 3

July : Russia suffers world's largest DDos attack to date

Q2, 2013 compared to Q2, 2012

•DDos attacks up 33% compared to Q2, 2012

•23% increase from Q2, 2012 in total # of infrastructure (Layer 3 & 4) attacks

•79% increase in total # of application (Layer 7) attacks

•123% increase in DDos attack duration (38 hrs vs 17 hrs) 2

DDos Attack Activity Timeline 2013

$649kAverage cost of a cyber attack to a large business

DID YOU KNOW?

$50kAverage cost of a cyber attack to a small to medium sized company

The majority of global companies underestimate the scope of new Cyber threats appearing daily

Sources: 1. Dawn.com 2. http://www.valleytalk.org/wp-content/uploads/2013/07/Prolexic_Quarterly_Global_DDoS_Attack_Report_Q213_071313.pdf 3. India Times 4. Pcworld.com 5. 2013 Global Corporate IT Security Risks Survey


Russia Acceleration


Add more Datacenters• Attempt to get close to end-users• Expensive• Complex• Sync problem• Doesn’t solve performance issue

1

HW Appliances• Expensive• Need IT team• No support for remote end users

2

Traditional CDN• Only focused on caching• Doesn’t support client-server apps

3

AD

CW

OC W

OC

Cache

Online Performance Improvement Options

Cacheable

Non-cacheable


Creates a ‘Fast Secure Tunnel’ over the Internet

Reaches every corner of the world

No CAPEX for HW/SW

Fully Managed Service

Routes around issues

Russia Acceleration – How It Works


40kB static object before & after adjustment (CNAME change)

Gain = (old time – new time) / (new time) = (490 – 68) / 68 = 621%

490ms

68ms




0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 230

500

1000

1500

2000

2500

HTTP Performance (From Russian cities)

Akamai CDNetworks San Jose Origin


Russia Acceleration - Online Security

Without Russia Acceleration Security With Russia Acceleration Securityattacks are absorbed, detected & defended against

UDP Flood, ICMP Flood, SYN Flood, Application Layer Attacks, Ping of Death, Slowloris, Zero-day DDoS


Case Study – Archer Daniels Midland (ADM)

Secure Sign InSearch Features

Media Rich Content (Images & Flash)


Case Study - Archer Daniels Midland (ADM)

24.5KB SOT

115% Reduction with

CDNetworks

With CDNetworks


Case Study – Behr Paints

Secure Sign In

Search Features

Media Rich Content (Images & Video)

eCommerce

Rank in US 14,901 Sites Linking In

1319


Customer Case Study – Behr Paints

24.5KB SOT

118% Reduction with

CDNetworks

With CDNetworks


Russia Online – Do’s & Don’ts

• DO partner w/ a trusted organization (U.S. Russia Business Council ), for strategic business planning

• DO partner w/ a global CDN specializing in emerging markets (CDNetworks ), to ensure accelerated

& secure website delivery & DDos attack mitigation

• DO invest in a professional translation of your website & marketing materials

• DON’T forget - SPEED MATTERS!

• DO adapt online advertising & SEM campaigns to popular Russian platforms

• DO establish a specific Russian customer service function

• DON'T assume e-commerce conversion rates will be on par w/ developed markets

• DO offer multiple payment optionsSource: Petukhova, Svetlana; Strepetova, Margarita (2012) : Broadb& internet access availability in Russia: Regional aspects, 23rd European Regional Conference of the International Telecommunication Society, Vienna, Austria, 1-4 July 2012


End of Presentation

U.S. Russia Business CouncilWashington D.C.www.usrbc.org

Moscowwww.usrbc.org/ru

Cdnetworks.com

us-russia business council webcast: demystifying russia online

Technology

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demystifying russia

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