Where is “the cloud”? It’s everywhere and nowhere; it’s the power of algorithms distributed across entire networks but concentrated down to the screen of your wireless laptop; it’s the sum of all the world’s on-demand computing jobs, churning away in big data centers in secure, undisclosed locations, flinging their inputs and outputs across the electronic ether. But for one day, at least, the nucleus of the cloud will be in a definite place: Microsoft’s New England Research and Development Center in Cambridge, the venue for Xconomy’s December 10 Cloud³ Forum and its companion event, CloudCamp Boston.

That 3 in the title of our event is an exponent, as in “Cloud Cubed.” The first time Xconomy organized a cloud computing seminar, back in June 2008, the urgent questions in cloud computing still centered around the basics—was the cloud secure? private? reliable? Today, vendors are on their way to solving most these fundamental technological challenges. But in their place, there’s a new welter of implementation-related questions.

Which cloud service model would your company be best off using—Software as a Service, Platform as a Service, Infrastructure as a Service? Should you build a private cloud, tap a public one, or think about hybrid models? How much money can you really save by turning to the cloud—and how much will you have to spend? Which cloud services are startups and big enterprises really using today, and which are still hype? Which cloud players do entrepreneurs need to know about beyond the Big Seven (Amazon, Google, IBM, Microsoft, Salesforce, Sun, and VMware)? And where is the cloud heading—what new services and opportunities are being opened up for entrepreneurs?

When we sat down to design the agenda for this year’s cloud forum, we realized that there are so many of these important questions on the table that we couldn’t just call the event Cloud²—so we jumped straight to Cloud³.

We’re assembling a crack crew of industry experts for Cloud³, including representatives of big cloud infrastructure providers such as Akamai, Microsoft, and Iron Mountain; startups making the cloud more useful to other companies, such as Cloudswitch; and companies leveraging the cloud to provide services to their own customers, such as Allurent, Litl, Pixily, and Sonian. The half-day session (from 8:30 a.m. to 12:30 p.m.) is designed especially for entrepreneurs, investors, and technologists, and our goal is to make sure that every attendee has a chance to learn from (and network with) the practitioners who are building and exploiting real cloud services.

We’ll release the detailed agenda for the event soon, but here’s the general picture:

• Keynote talks by Tom Leighteon, chief scientist at Akamai, and Yousef Khalidi, of the Windows Azure team at Microsoft.

• “Cloudbursts”—a series of presentations by six local startups offering innovative cloud services and/or making creative use of the cloud.

• An interactive “unpanel” exploring the nuts and bolts of how companies can best tap cloud services led by Sim Simeonov, a former partner at Polaris Venture Partners who now heads executive advisory service FastIgnite.

• A progress report from Eric Nakajima from the Commonwealth of Massachusetts on the Holyoke High Performance Computing Center in western Massachusetts.

You can see the full speaker list for Cloud³ here, and you can register for the event here. Early bird registration is available for $95—but we urge you to reserve your place now, because after November 23, the price goes up to $150. (We’ve also got a limited number of student tickets available for $30, and students can apply for event scholarships through the Stay in MA Program.)

We’re pleased to announce that we’re partnering with the CloudCamp organization to turn December 10 into a full day of cloud computing discussion and learning. CloudCamp Boston, an unconference for early adopters of cloud computing, will take place in the same space at Microsoft from 2:00 p.m. to 7:00 p.m. People who sign up for CloudCamp (registration is free) not only get discounted admission to Cloud3, but are welcome at a joint networking lunch from 12:30 to 2:00 p.m., which is hosted by Xconomy and Microsoft.

If you have questions about the event, please feel free to contact me at wroush@xconomy.com.

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For 15 years now, we’ve all thought of the World Wide Web as a near-literal web of connections between millions of servers in different locations, with each machine hosting just a tiny slice of the Web’s overall content. But that’s not the new shape of the Web, according to Arbor Networks of Chelmsford, MA. Today, a startling amount of Web content and traffic is controlled by just a handful of large Internet companies.

“As of 2009, 60 percent of all Internet content comes from, or terminates within, just 100 to 150 companies,” says Craig Labovitz, Arbor’s chief scientist. “That’s a very dramatic change in where the data is coming from.”

What that means in practical terms is that if you surf to the website for, say, the Pretty Good Car Company, more than likely the data is no longer stored on servers at Pretty Good itself, but on machines owned by a centralized infrastructure provider that Pretty Good has hired to handle its site, such as Akamai, Limelight, Rackspace, Amazon, Equinix, GoDaddy, or Verizon.

Arbor released data on this and other trends yesterday at the North American Network Operators Group conference in Dearborn, MI. The company makes software that helps companies detect and prevent denial-of-service attacks against their Internet servers.That software is installed on the Internet routers of 70 to 80 percent of the top content providers and Internet service providers in North America, which allows Arbor to collect vast amounts of information about Internet traffic.

Indeed, Arbor’s view of network traffic rivals and in some ways surpasses that of Cambridge, MA-based Akamai, whose “State of the Internet” reports we’ve covered frequently here[link]. Only about 20 percent of global Internet traffic passes through Akamai’s content distribution network.

In a trend that Arbor calls the “rise of the hyper giants,” most Web content and traffic is moving to a small number of very large hosting providers and cloud services companies. The world’s Internet addresses are controlled by about 35,000 network operators, and as recently as 2007, the majority of Internet traffic was smoothly distributed across these operators. But today, 60 percent of all Internet traffic is generated by just 100 companies, according to Arbor, which conducted its study in collaboration with the University of Michigan and the non-profit Merit Network in Ann Arbor, MI.

There is concentration at the very top: 30 percent of all traffic comes from just 30 companies. And Google alone generates about 6 percent of all Internet traffic, Arbor found. Akamai, Microsoft, Limelight, Yahoo, and GigaNews (which hosts Usenet newsgroups) are also on the list of “hyper giants.”

“Basically, 150 to 200 companies are now generating the majority of Internet content, at least as measured by traffic,” says Labovitz. It’s an inevitable and, in some ways, unsurprising trend, given the rising popularity of cloud-based hosting models for both content and software, and in view of the huge investment required to build data centers with the processing and communications capacity to handle today’s most popular forms of content, especially bandwidth-hogging video. But one implication, of course, is that outages and other snafus in a single location can affect many more Internet users all at once.

“Ensuring availability used to mean backing up your mail server or your laptop,” says Labovitz. “Nowadays, what does it mean if all your e-mail is on Google and Google is down for the day? If it wasn’t true before, it is very quickly becoming true: the network is the computer.”

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Engineers long ago figured out how to deliver high-definition TV signals via over-the-air broadcast and cable, but the Internet is a different animal. Trying to squeeze that much data through a home or office Internet connection can lead to stutter and long “buffering” delays. For some time now, Akamai has been working on upgrades to its global distribution network that will allow it to deliver clients’ high-definition video streams without interruption—including a partnership with Microsoft last October to adapt HD signals for the company’s Silverlight video format and a deal with Inlet Technologies in July that did the same for the Apple iPhone over AT&T’s 3G network.

Today the company added Adobe’s Flash format to the mix and unveiled a comprehensive “Akamai HD Network” that, according to Akamai, can deliver HD-quality video to broadcast-scale audiences. The key to the network, as we reported in the July iPhone story, is a technique called adaptive bitrate streaming, which allows Akamai to raise or lower the quality of a video stream to match the available bandwidth without any interruption in viewing. Deploying this adaptive technique to its network of 50,000 servers around the world will allow Akamai to transmit smooth video to audiences in 70 countries, the company said. Over the HD network, users can also pause and rewind a video stream, just as they would if they were using a DVR.

“We’re entering a different online world, where many content owners and publishers need to deliver HD-quality video to a much wider online audience, with a higher level of interactivity for consumers,” Akamai president and CEO Paul Sagan said in a statement. “With the Akamai HD Network, we are revolutionizing the way content traverses the Internet with a new approach to bringing an HDTV-like experience online.”

To watch a replay of Akamai’s live webcast today announcing the HD Network go here and choose Flash or Silverlight. Or if you’re browsing from an iPhone, go to iphone.akamai.com/hdnetwork.

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More and more big companies are supplying their employees not with standard desktop PCs and office software, but with “virtualized desktops.” If your company has made the switch, then your desktop may still look the same, but your office programs are actually running in your company’s data center, where a server is feeding a screen image to your machine over the company’s internal network.

It’s an attractive way to provide software to people in large organizations, since centralized services are far easier to maintain and upgrade. Vendors both large (Microsoft, Citrix, VMware) and small (Virtual Computer, InstallFree) are offering systems that make desktop virtualization more manageable, and research firm Gartner predicts that at least 15 percent of professional desktop PCs will be virtualized by 2014. But if an organization is very large or is extended across the globe, it can get tricky and expensive to keep hundreds or thousands of desktop-to-data-center connections open across a private network.

Cambridge, MA-based Akamai (NASDAQ: AKAM) is proposing an alternative. Today, the company is rolling out a new service that enables desktop virtualization over the open Internet, with help from Akamai’s network of 50,000 “edge servers” around the world. The company originally built this network to smooth the delivery of multimedia content to Web audiences, but has been enhancing it over the last few years so that companies can also use it to improve the performance of Web- and Internet-based software applications. (A contract drug research company in California called Synteract, for example, uses Akamai’s network to speed up the Web-based system its researchers use to log clinical trial data.) So it’s not much of a stretch for Akamai to invite companies to route their virtual desktop traffic through Akamai’s servers as well.

“We have spent a lot of time applying our newer capabilities to browser-based applications, but we also want to accelerate other types of applications that aren’t browser-based,” says Neil Cohen, Akamai’s director of product marketing. That meant tailoring the company’s existing “IP Application Accelerator” service to work with virtual desktop management software such as Citrix’s XenDesktop, VMware View, and Microsoft Enterprise Desktop Virtualization (known as MED-V).

All of these virtual desktop infrastructure products can smooth the switch to centralized desktop management—but they don’t deal with some of the inherent problems in Internet-based networking, which include bandwidth limitations and lost data packets, an annoyance that grows more serious with distance. “The farther away you get from the virtual infrastructure”—meaning, the data center where the applications are running—”the worse the performance gets,” Cohen says. Companies can cure that problem by expanding their private networks, but “if you have to build new pipes to new locations to maintain performance, it kind of defeats the point” of economizing through virtualization, Cohen points out.

By feeding their desktop traffic over Akamai’s network, Cohen says, companies can switch to a virtualized desktop infrastructure even in far-flung international offices without having to install expensive Internet lines or new networking hardware. They can also extend virtual desktops to workers who may be connecting from an airport or a home office, rather than over a company’s virtual private network. “Akamai believes there is a large opportunity to deliver high-performance virtual desktops to anyone, anywhere, anytime, rather than having them be constrained to be on their private networks,” says Cohen.

Akamai will sell the new desktop virtualization acceleration service directly to companies that are already deploying software from Citrix and other virtualization vendors. But it will also make the system available through Entisys Solutions, a Concord, CA-based reseller that works closely with Citrix. The price will depend on the number of employees using the technology, says Cohen.

Akamai is the first company to offer large enterprises a way to handle desktop virtualization purely over the Internet, Cohen says. “They now have a choice when they are thinking about investing in virtual desktop infrastructure,” he says. “They can ask ‘Am I better served deploying over the wide area network, or over the Internet with Akamai, where it’s cheaper to buy bandwidth.’”

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At Akamai headquarters in Cambridge, MA, today, state officials took the wraps off a cross-media campaign intended to promote Massachusetts as a place to study, live, work, vacation, or grow a business. The new website for the campaign—themed “It’s All Here“—brings together resources for entrepreneurs considering starting their companies in Massachusetts, students looking for jobs in the state, residents looking for housing or recreation opportunities, and the like.

Gregory Bialecki, the secretary of the state’s Executive Office of Housing and Economic Development, said at a ceremony unveiling the website that one of the campaign’s goals is to be “unabashedly positive” about the state’s attractions. “One of the things that we suffer from a bit is New England modesty,” he said. “We’re not going to do that. We’re going to err on the side of bragging.”

Bialecki pointed to the fact that about 20 percent of all Internet traffic passes through servers at Akamai, which is hosting the new site. “They are a critical part of the Internet infrastructure for the world. That’s not bragging, they are doing it every day.”

The tag line “It’s All Here” was actually introduced by the administration of former Massachusetts Governor Mitt Romney back in 2003 as part of a campaign to bring new businesses to the state. It’s since been appropriated by the state’s office of travel and tourism. But the effort launched today is broader, intended both to advertise Massachusetts’ strengths to the rest of the world and to persuade students and consumers who already study or live here to stay.

Bialecki described the campaign as a non-partisan, public-private collaboration that transcends any one governor’s administration and any one political regime. Key groups involved include the Department of Business Development (a part of Bialecki’s agency), the Massachusetts International Trade Council, the Massachusetts Development Finance Agency, better known as Mass Development, and the Massachusetts Alliance for Economic Development, better known as Mass Econ.

Kofi Jones, the director of communications and public affairs for Bialecki’s office and one of the creators of the new campaign, demonstrated the “It’s All Here” website for a packed room of business community members and onlookers at Akamai. The site is divided into sections entitled “Grow,” “Live,” “Play,” “Work,” and “Study,” with each section featuring links to government and non-government information resources as well as a clickable map highlighting regional resources or attractions. Personal testimonials pepper the site, including one from Mohamad Ali, a former IBM executive who recently joined Avaya. “Living and working in Massachusetts has provided my family with unrivaled opportunity,” Ali’s quote reads.

The “Grow” section will likely be of most interest to Xconomy readers. It features sub-sections on business resources around the state as well as roundups of resources in specific clusters such as clean energy, defense, information technology, life sciences, manufacturing, and foreign trade and investment. A featured section of the site, entitled Opportunity Here, includes a guide to networking opportunities for job seekers as well as actual job listings.

Jones said the website was designed by 451 Marketing, a Boston-based inbound marketing agency.

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New England tech and life sciences firms forged several interesting new partnerships this week.

—Apperian, a Boston-based startup developing enterprise-oriented iPhone applications, raised $1 million in a Series A venture round led by CommonAngels of Lexington, MA.

—Cambridge, MA-based Akamai (NASDAQ: AKAM) teamed with Seattle’s Delve Networks to provide a new online platform for publishing videos and distributing them to any digital media player. The new service will compete against that offered by Cambridge-based Brightcove.

—Cardiorobotics of Newport, RI, and Pittsburgh, PA, raised $11.6 million in a Series A round from Eagle Ventures, the Slater Technology Fund, the Pittsburgh Life Sciences Greenhouse, and others. Eric wrote a nice profile of the startup’s efforts to develop a “snake robot” that would make heart surgeries less invasive.

—Advanced Electron Beams of Worcester, MA, closed a Series C round of financing worth $14.2 million. Flagship Ventures led the deal, which was joined by return investors Agman Partners, Atlas Venture, GE, General Catalyst Partners, and RockPort Capital Partners.

—Cancer drug developer Ariad Pharmaceuticals (NASDAQ: ARIA) of Cambridge netted $30.9 million in an offering of 19 million new shares of stock-–$3 million worth of which were purchased by CEO Harvey Berger.

—Boston-based data-storage firm Iron Mountain (NYSE:IRM) announced a planned notes offering worth $450 million.

—IT-focused venture firm Longworth Venture Partners of Waltham, MA, reportedly raised $122 million of a targeted $180 million for its third fund.

—Cambridge-based drug developer Alnylam Pharmaceuticals (NASDAQ:ALNY) inked a deal with Vancouver-based Tekmira Pharmaceuticals (TSX:TKM) to develop new particles to deliver RNA-interference drugs. Financial terms of the agreement were not disclosed.

—Idenix Pharmaceuticals (NASDAQ:IDIX), also of Cambridge, priced a secondary public offering of 7.25 million shares at $3.14 each. Idenix develops treatments for Hepatitis C.

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Last week’s heat wave did nothing to slow the deal announcements in the Northwest. We saw plenty of action in software, Internet, and biotech.

—The big news was the Internet search deal finally announced between Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO), who have been hammering out the details for months. As Eric and I reported, the 10-year partnership puts Microsoft in charge of both companies’ search engine technology, while Yahoo will run advertising sales and distribution for Yahoo Search and Microsoft’s Bing. (Bing technology will be used on both companies’ search sites.) The deal is structured around revenue sharing, whereby Yahoo gets 88 percent of the money made through the partnership for at least five years. Bing will get some much-needed scale and resources, and Microsoft said it plans to spend several hundred million dollars on the integration process.

—Redmond, WA-based Concur (NASDAQ: CNQR) acquired European business software developer Etap-On-Line, as Eric reported. Financial terms were not released. Concur makes software to help companies process and manage expenses, travel, and vendor invoices.

—Portland, OR-based Webtrends acquired Seattle firm Widemile, which focuses on multivariate testing and site optimization technology. Financial details were not announced. Webtrends makes Web analytics software for business intelligence applications.

—Seattle-based Delve Networks, a video management and media platform company, formed a partnership with Akamai, the Cambridge, MA-based digital media content distributor. Financial terms were not disclosed. The two companies are teaming up to provide an online video platform to help customers publish videos online and distribute them to any digital media player (including mobile devices). The move is seen as an effort to better compete with online video firms like Brightcove, also based in Cambridge, MA.

—Seattle-based Amnis raised the first $839,000 of a venture round expected to be worth $1.5 million, as Luke reported. Amnis, which makes a scientific instrument used to produce detailed images of large numbers of cells, raised the money from existing investors CVF LLC, MedVenture Associates, OrbiMed Capital, and angels. The company’s customers include the National Institutes of Health, the Pasteur Institute in France, and large drugmakers like Amgen and GlaxoSmithKline.

—Wilsonville, OR-based electronic design automation firm Mentor Graphics (NASDAQ: MENT) bought Embedded Alley Solutions, based in San Jose, CA, for an undisclosed price, as Eric reported. Mentor plans to use Embedded Alley’s mobile software development programs to improve its own operating system.

—Covance (NYSE: CVD), the Princeton, NJ-based drug development services company, has agreed to acquire a Seattle laboratory run by Merck’s Rosetta operation, as Luke reported. Merck has been winding down this operation since October, but has agreed to pay Covance $145 million over five years for genomic analysis services from the Seattle lab, called the Rosetta Gene Expression Laboratory, based in South Lake Union.

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Seattle-based video management and media platform company Delve Networks announced in a press release today that it is partnering with Cambridge, MA-based digital media content distributor Akamai to provide a new online video platform. Akamai, which also has an ofice in Bellevue, WA, will combine its media delivery service with Delve’s video platform, so customers can publish videos online and distribute them to any digital media player, including mobile devices. The release calls the resulting program a real alternative to Brightcove, and one that isn’t limited to the Adobe system.

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For a long time, watching video on the Apple iPhone meant YouTube or nothing—and it only worked if you were within range of a Wi-Fi network. But now Cambridge, MA-based content distribution firm Akamai is helping many of its customers optimize live and recorded video for direct delivery to iPhones. Which, in effect, turns Apple’s devices into mobile televisions: if you’re at the bus stop and have a craving for Fox Business News, for example, it’s now there for you, even if you don’t have a strong Wi-Fi or 3G signal.

It’s all part of the iPhone 3.0 changeover. When Apple released the update for the iPhone’s operating system on June 17, it offered an improvement especially designed to help people on the go watch video on their phones even when they’re in areas with flaky broadband wireless access. Called “variable bit rate streaming,” the technology has long been a feature of most Web-based video delivery; it allows video providers to adjust the quality of streaming video in real time to fit the available bandwidth.

Last week Akamai said its clients publishing iPhone video can now take advantage of variable bit rate streaming as part of the company’s existing Media Delivery service. It also launched a mobile showcase for organizations doing exactly that. The showcase, at iphone.akamai.com, includes live and previously recorded videos from NASA, NPR, Fox News, USA Today, and the Discovery Channel, among other publishers.

To generate the live video streams, which include Fox Business News and NASA TV, Akamai turned to Raleigh, NC-based Inlet Technologies for help. Inlet’s “adaptive streaming” technology turns a live TV broadcast into digital packets that go out over a wireless system like AT&T’s 3G EV-DO network at whatever bit rate the network and the destination device can handle. That means users don’t have to pick from high- or low-bandwidth video streams, don’t have to wait while video “re-buffers,” and aren’t even aware when the stream shifts from a lower rate to a higher one, or vice versa.

Inlet also makes video encoding software that helps media companies build up libraries of recorded video content that can then be delivered on demand. That’s what most of the companies featured in the Akamai iPhone showcase are doing; today’s lineup, for example, includes several short episodes from USA Today’s “Talking Tech” video feature and a selection of animated slide shows accompanying audio reports from NPR News.

Akamai’s role is to transport the Inlet-encoded video over its global network to the AT&T media servers closest to the actual iPhone users requesting the material. The company hopes to work with more broadcasters to get their programs to iPhone and iPod Touch owners, who consume far more broadband content than owners of other mobile devices. (Some 80 percent of all data requests from mobile devices over Wi-Fi networks come from iPhones and iPod Touch devices, according to Akamai.)

“Apple’s extensive support for new web standards like HTML 5 and HTTP streaming of live and on-demand video to the iPhone and iPod touch has transformed the quality of video content that consumers can now view while mobile,” Tim Napoleon, Akamai’s chief strategist for digital media, said in an announcement last week. “To be able to watch video anytime, anywhere at a quality this high is nothing short of amazing.”

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Yesterday, I participated in a very exciting event that culminated with the announcement by Massachusetts Governor Deval Patrick of an important funding program—a $1 million annual business plan competition called MassChallenge.

The essence of this announcement is to match the next generation of young aspiring entrepreneurs with numerous sources of capital, most likely local venture capitalists. The Governor has committed the State to match dollars committed by private sector investors to the top entrepreneurs who survive the MassChallenge screening process.

During the course of the events yesterday, my good friend Andy Ory (CEO of Acme Packet) and I moderated a panel stocked with local success stories: Desh Deshpande, Paul Sagan of Akamai, Bob Hower of Advanced Technology Ventures, Scott Savitz of Shoebuy.com, and Brian Shin of VisibleMeasures. We explored what was and was not working in the region as we try to build great venture-backed companies.

One consistent theme that the panel identified was the lack of broad-based mentorship to help this next generation of great entrepreneurs get started. So here is the commitment that Andy and I made to the audience: we will recruit 12 great successful CEOs to work with 12 VCs to mentor 12 promising young entrepreneurs to launch 12 new companies over the next 12 months. (Admittedly, I stated to the audience that it would be 20 companies in the first year, but upon reflection the alliteration of “12″ worked much better).

Office Hours: So what I will pursue over the next few months with Andy Ory is to see if we can establish “office hours”—that is, can we get a dozen successful CEOs in town to commit to open up their calendars and Rolodexes to a dozen promising entrepreneurs. Ideally these CEOs would serve as non-executive chairpersons and possibly provide some initial capital, but more importantly, they would provide guidance and advice. VCs get paid to see new opportunities, so it should be reasonably straight forward for me to line up the investors (maybe I will lean on the board of New England Venture Capital Association, which I happen to chair). And working with organizations such as MassChallenge, as well as our own deal flow, we should be able to identify a dozen great opportunities that merit funding.

I will keep you posted on our progress.

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On Friday a judge in the U.S. District Court of Massachusetts overturned a February 2008 jury verdict that had ordered Tempe, AZ-based content distribution network Limelight Networks to pay Cambridge, MA-based Akamai Technologies $45 million in damages for patent infringement. Limelight successfully challenged the jury award based on new case law. Akamai immediately said it would appeal the decision.

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Internet news sites are experiencing their fourth biggest traffic day ever, as millions of people who should be working instead point their browsers to online video coverage of the “March Madness” NCAA basketball playoffs, judging by the Net Usage Index: News, a Web traffic monitoring service maintained by Cambridge, MA-based Akamai Technologies.

The index indicated that global traffic to news sites through Akamai’s network hit a peak of 6,337,283 visits per minute shortly after 2:00 pm Eastern time today, amidst the first college games of the day.

That peak would put March 20, 2009 in the fourth slot on Akamai’s list of the top news days in Internet history, just behind November 4, 2008 (the day of Barack Obama’s election to the U.S. presidency), June 22, 2006 (the day Ghana eliminated the U.S. in the soccer World Cup), and March 20, 2008 (Day One of last year’s NCAA basketball playoffs).

Akamai operates a global content distribution network that carries broadband Web content such as video for dozens of major media companies, and it’s the exclusive provider of static and streaming-media content delivery for CBSSports.com, where most of the online NCAA playoff video can be found. In a press release, CBSSports.com said today that more than 2.7 million people visited the NCAA March Madness video player during the first day of the Division I Men’s playoffs, a 56 percent increase over 2008. Online viewers watched a total of 2.8 million hours of live streaming video and audio, a 65 percent increase over last year, according to the release.

Jason Kint, senior vice president and general manager, CBSSports.com, called March Madness “the largest and most popular live sports event on the Internet.”

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Rather than sending President Obama’s weekly Web video address to YouTube for hosting, as it has in past weeks, the White House published last Saturday’s video on its own website, Whitehouse.gov, which is hosted by Akamai. But an Akamai official says the company can’t comment on whether the widely discussed decision signals a permanent turn away from YouTube, which has been criticized for its use of cookies to track viewing patterns.

Cambridge, MA-based Akamai owns one of the world’s largest Web content distribution networks, and specializes in delivering broadband content such as video. As ReadWriteWeb and other blogs have noted, a simple “whois” search shows that it’s the host for the Whitehouse.gov domain.

The president’s webcasts had come to be known informally as the “the weekly YouTube address.” But YouTube uses persistent cookies, small files stored on users’ hard drives, to track who’s watching its videos, and federal policy forbids such persistent cookies on government sites. To the dismay of privacy advocates, the administration carved out an exemption to the rules for YouTube shortly after the inauguration, and observers such as Chris Soghoian, a fellow at Harvard University’s Berkman Center for Internet and Society, interpreted Saturday’s change as a response to the privacy concerns.

But according to a White House statement quoted last night in the New York Times Bits Blog, the administration hasn’t changed its policy on YouTube videos. Saturday’s switch was merely an experiment, White House spokesman Nick Shapiro said. Google itself weighed in later on its public policy blog, saying that the reports that the White House had ditched YouTube were wrong. The company added that it has now created an embeddable video player that handles cookies in a way that’s more consistent with federal privacy policies.

Curious about Akamai’s role in all this, I wrote today to Jeff Young, the company’s director of corporate communications. I asked him whether Akamai had worked directly with the White House to embed Saturday’s address, whether Akamai’s video player technology sidesteps the concern over cookies, and whether the company has any insight into the White House’s Web video plans. Young was unable to provide any answers. “I can’t comment on any of this, at this time,” he said in an e-mail reply.

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This morning, we gave you a guide to online outlets with live streaming video of President Obama’s swearing-in. This afternoon, we can report that record-breaking audiences accessed these streams, at least as far as Cambridge, MA-based networking leader Akamai was able to measure.

At the height of Internet traffic at approximately 12:15 p.m. Eastern time (during Obama’s inauguration speech), more than 7 million simultaneous data streams were being delivered over Akamai’s network, according to the company. Most of these streams carried live video, with total traffic peaking at a vertiginous 2 terabits per second. That makes today Akamai’s busiest day ever—and by extension, probably one of the highest-volume days in the history of the Internet, since Akamai handles about one-fifth of all Internet traffic globally, giving the company a representative view of network activity worldwide.

Akamai publishes a fascinating real-time visualization of traffic over its EdgePlatform here. The platform is used by a number of large media outlets to speed delivery of broadband video and other digital content to consumers, including CNET, NBC, Thomson Reuters, USA Today, and Yahoo. The New York Times, Ustream, Viacom, and the Wall Street Journal all broadcast live Adobe Flash video of the inauguration today over Akamai’s network.

Measured by individual Web page requests, traffic around the hours of the inauguration was high but not record-setting: the peak of just over 5.4 million requests per minute, as measured by Akamai’s Net Usage Index for News, came in at fifth place historically, behind election night in the U.S. last November and three sports-related events (a World Cup soccer playoff and two NCAA basketball playoff games).

“It’s really a day about streaming,” says Jeff Young, Akamai’s director of corporate communications. “It was a very high news day in terms of visitors per minute, but the thing to point out about our Net Usage Index is that when you go and access a live video stream and stay on that stream, you’re counted as just one visit. On a day like today, you really want to watch streaming video. So the news today was that the Internet has now matured to the point that people can watch live news for an extended period of time.”

Traffic at streaming media news sites was so high during the inauguration ceremonies, in fact, that Akamai detected a simultaneous drop in traffic to other kinds of websites, including e-commerce sites. “If you do a comparison of our commerce index against our news index, you are able to see less people are shopping during the inauguration, because they are tuned in,” says Young. “There is a pool of Internet users, and while they are doing one thing, they are not doing something else.” (It seems likely, however, that the brief hit to the economy from lower e-commerce traffic was more than offset by sales of Obama memorabilia, or “Obamabilia,” as the New York Times has called it.)

Of course, there’s another big thing that many people probably weren’t doing around noon today: working. Most Web traffic records, says Young, are set during working hours, for the simple reason that people aren’t at home, and therefore aren’t able to tune in for crucial events using their old-fashioned televisions. “That’s exactly why events such as March Madness, where the first 64 games occur during the workday, drive such huge traffic,” Young says. “An inauguration would probably be a big event anyway, but if it were on a weekend, you’d find more people accessing it from their televisions.”

Akamai was prepared for the onslaught, Young says. “Our platform is architected to handle events like this, and our services performed as expected. Certain news sites had planned capacity with us, and in most cases we delivered [at speeds] well above what the plan called for.”

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Today is Cyber Monday—the Internet sequel to the Black Friday retailing rush. And according to Cambridge, MA-based Akamai, whose global network of content servers is used by hundreds of large e-commerce sites to accelerate website performance, traffic to e-retail sites is approaching record-breaking levels today as consumers try to complete their holiday gift-giving online.

Akamai’s Net Usage Index for Retail, which aggregates data for a representative set of more than 280 retail sites using Akamai’s services, showed that as of 10:00 a.m. this morning, Eastern time, about 5.32 million people per minute were visiting retail sites supported by Akamai. That number already surpassed the 2007 Cyber Monday peak of 4.6 million visitors per minute.

But by 11:00 a.m. traffic had risen to some 5.80 million visitors per minute. And it seemed on track to surpass the global retail traffic record of 6.50 million visitors per minute, set yesterday (November 30).

Online traffic was impressive on Black Friday as well, peaking at 5.96 million visitors per minute at 12:00 p.m., well above 2007’s Black Friday peak of 4.04 million visitors per minute. About half of Friday’s peak traffic was from North America.

Akamai agreed to supply Xconomy with additional data as the day continues, so please check back for updates to this story.

Update, 4:10 pm, 12/1/08: Monday e-retail traffic through the Akamai network reached a peak of 6,713,653 visitors per minute today at roughly 2:30 p.m. Eastern time, setting a new record.

Traffic from North America peaked at around 1:45 pm at 3,106,453 visitors per minute. (Data for additional regions is online here.)

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Our apologies to all Xconomy readers for ending the week on a downer, but it’s time for a roundup of the week’s tech layoff news around Boston.

On Wednesday, Cambridge, MA-based Akamai said it would cut 110 jobs, or about 7 percent of its workforce.

On Thursday Luke reported news of 30 more layoffs at Cambridge, MA-based CombinatoRx, leaving the beleaguered biotech with about 55 people, one third the company’s size prior to news earlier this month that its main arthritis drug had failed in clinical trials.

Earlier today we reported that the healthcare unit of Royal Philips NV, headquartered in Andover, MA, will cut about 1,600 people from its staff worldwide, with about 100 of those cuts occurring in Andover.

Xconomy has also received unconfirmed reports about layoffs at two more local companies. WSI, an Andover, MA, company that provides weather information to media, energy, and aviation firms, cut 28 workers or about 10 percent of its staff on November 13, according to one source. And NameMedia, a Waltham, MA company that auctions (and sells advertising on) parked Internet domains, cut 30 workers on November 11, according to another report. We are attempting to obtain confirmation of these job cuts, but at press time no one at either company had responded to our inquiries.

We’ve updated our Boston Tech Layoff Tracker with the latest numbers.

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Akamai Technologies (NASDAQ:AKAM) is contributing to our growing list of local tech firms laying off workers recently, saying it will cut about 110 employees or 7 percent of its total staff this quarter to reduce operating costs. But the Cambridge, MA-based company, which operates a worldwide network of servers that speed delivery of its clients’ content to Web users, gave no indication of where it would make the layoffs.

Akamai financial chief JD Sherman asserted in a statement that the company has not changed in business outlook, and the firm expects that the cash saved by reducing its workforce will provide dollars to invest in its core businesses and international expansion. Yet the company anticipates a $4 million charge related to severances and other costs related to the layoffs, on top of losing about $2.5 million in sublease income at leased facilities.

Wade wondered aloud in a post yesterday whether this week’s move by Amazon (NASDAQ:AMZN) into the content delivery network arena with its CloudFront service would bring a cold front to Akamai. For some Akamai workers—and for much of the economy—the proverbial bad weather has arrived.

We have added the data on Akamai’s layoffs to our Boston Tech Layoff Tracker, where the total now stands just shy of 1,500.

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Does Amazon’s CloudFront announcement today mean a cold front is on the way for Cambridge, MA-based Akamai?

Amazon (NASDAQ: AMZN) said a couple of months ago that it was working on a way to let users of its Amazon Web Services  infrastructure speed delivery of Web graphics, software downloads, audio and video files, and other materials to Web users over its global network of servers. And today, in a direct assault on existing content distribution networks (CDNs) like Akamai, Limelight, and Voxel, it has unveiled the beta version of that service, called CloudFront.

It’s the latest step in the expansion of the Seattle e-retail giant’s cloud computing infrastructure, which allows other companies large and small to rent as much external processing power or storage as they need. As with its processing utility (the Elastic Compute Cloud, or EC2) and its storage utility (the Simple Storage Service, or S3), Amazon will sell access to CloudFront on a self-service, pay-as-you-go basis.

The service seems aimed at least in part at customers who currently have fixed, long-term contracts with the likes of Akamai (NASDAQ: AKAM) and Limelight, or who don’t generate enough traffic to qualify for discounted rates with the established CDNs.

“Traditionally, to secure scalable, reliable, low latency content delivery, businesses have been required to negotiate upfront or long-term commitments,” Amazon’s CloudFront announcement states. “Even then, only customers with significant scale have been able to negotiate inexpensive rates. With CloudFront, there are no upfront costs or commitments required—all developers are able to benefit from Amazon’s scale to enjoy low prices.”

Pundits have speculated that Amazon’s new service will put pressure on existing CDNs to introduce lower or more flexible prices. When I put that point to Jeff Young, Akamai’s director of corporate communications, he declined to comment.

Young did say, however, that he thought Akamai’s network—which was built specifically to support transfers of large or frequently requested files such as e-commerce Web pages and high-definition videos—will continue to be a better choice for most large online publishers. “Akamai provides comprehensive content and application acceleration services for powering the online businesses of today’s leading global enterprises, helping our customers to monetize their content,” Young said.

For existing Amazon Web Services customers, CloudFront makes it easy to copy original files already stored on S3 and replicate them across CloudFront “edge servers” around the Internet, where they’re closer to the users requesting them and can therefore be delivered faster. That’s the same idea behind all CDNs—the difference with CloudFront being that users pay only for actual data transfers, at rates that vary between $0.09 and $0.22 per gigabyte, depending on the geographic area. (Transfers from Amazon’s edge servers in Hong Kong and Japan are more expensive than those from servers in North America and Europe.)

Amazon identified two early users of CloudFront: Dallas, TX-based online retailer Woot, which highlights one product per day and is using the service to deliver product photos to shoppers, and London, UK-based casual games company PlayFish, which uses CloudFront to speed downloads of its games.

But CloudFront isn’t the first pay-as-you-go CDN: that title may belong to New York-based Voxel, which introduced technology back in April that allows customers to pull content into its network from Amazon S3. Tech blogs such as ReadWriteWeb have described CloudFront as a preemptive move by Amazon to keep services like Voxel from overtaking the market for cloud-based content distribution.

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At 11:00 pm Eastern time last night—when the polls closed on the U.S. West Coast and most TV news outlets called the election in favor of the new President-elect, Barack Obama—Internet users streamed to news websites in unprecedented numbers, according to Cambridge, MA-based Akamai. The company, which has been measuring Internet traffic to news, retail, and music websites since 2005, said traffic peaked at about 8.6 million visits per minute, besting the previous record of 7.3 million visits per minute—set on the day Ghana eliminated the U.S. in the 2006 World Cup—by 17 percent.

The traffic record obviously reflected the enormous global interest in the U.S. presidential election and in Obama’s history-making triumph. But it’s also a sign that more people around the world are consuming news using several media at once—surfing the news sites and political blogs while also watching the electoral maps light up on TV, for example.

“This is the first noted news peak that occurred during the evening hours in North America, meaning Internet users would have accessed likely from home,” Jeff Young, Akamai’s director of corporate communications, told me today. “All the other peak events listed on our index occurred during the work-day hours, when you would expect more people to be at their computers. This shows the significance of the Internet to election coverage.”

The third, fourth, and fifth biggest traffic records Akamai has measured came at mid-afternoon on the first day of U.S. college basketball’s “March Madness” in 2008, 2006, and 2007 respectively. The next highest politically-oriented traffic day was the day after the 2006 mid-term elections in the United States, which ranks 15th on the list. As TechCrunch noted in a story earlier today, Akamai’s Net Usage Index aggregates such data continuously, based in part on page-view requests at the more than 100 major news portals that use the company’s global network of Web servers to speed delivery of their stories to readers.

Last night’s record wasn’t just a brief spike, either. Traffic to news sites built gradually starting around 4:00 p.m. Eastern time, surpassing 6 million visits per minute shortly after 7:00 p.m. and boiling over at 8,572,042 visits per minute shortly after 11:00 p.m. In fact, any single minute sampled between 7:00 p.m. and midnight would have registered among Akamai’s top five traffic peaks. “If you were to compare against the previous peak, the World Cup game, that was much more of a short-term spike—a lot of traffic, but in a relatively short period of time,” says Young.

Traffic is also very high today, he points out—averaging about 4.6 million visits per minute. As a result, November 5 will enter Akamai’s record book somewhere around the number 10 slot.

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If you’re like me, you’re to the point where you can’t focus for more than two sentences without pausing to check FiveThirtyEight.com and Intrade, so I kept the roundup of Boston-area deals short this week.

—Battery Ventures of Waltham, MA, led a $17 million Series B round for Sunnyvale, CA-based ZeroG Wireless, a developer of low-power Wi-Fi chips. Morgenthaler Ventures and Greylock Partners participated in the deal as well.

—Andover, MA-based Helium, an online marketplace for writers, reportedly closed a $17 million Series A financing round and slashed its staff by roughly 30 percent, or 18 people. The cuts were distributed across engineering, customer service, and sales.

—Fairhaven Capital Partners, a spinoff of TD Capital in Cambridge, MA, closed its second investment fund with $250 million—$50 million more than it set out to raise. The firm plans to invest the money in early-stage technologies, as it did with its first fund.

—Newton, MA-based biotech firm Clinical Data (NASDAQ:CLDA) acquired Avalon Pharmaceuticals (NASDAQ:AVRX)of Germantown, MD, for $10 million.

—Video-hosting firm Brightcove of Cambridge, MA, inked a deal with AOL under which the media giant will manage all of its online video using the new Brightcove 3 platform starting in early 2009.

—Adding a bit of confusion to the digital-video space, one of Brightcove’s major suppliers, its Cambridge neighbor Akamai (NASDAQ: AKAM) forged an agreement with Microsoft to develop an adaptive streaming system for high-definition video that’s nearly identical to a service that will be included in the Brightcove 3 platform.

—Cambridge, MA-based HealthCare Ventures led a $28 million Series B round of financing for Trevose, PA-based InfaCare Pharmaceuticals. Atlas Venture, Longitude Capital, and FirstMark Capital joined the round.

—Drug developer Dyax (NASDAQ:[DYAX) of Cambridge, MA, inked an agreement under which investment fund Azimuth Opportunity will buy up to $50 million of its common stock over an 18-month period, Dyax reports. The money would help Dyax further the development of its lead drug DX-88 for hereditary angioedema.

—Watertown, MA-based EnVivo Pharmaceuticals, a developer of drugs for Alzheimer’s and schizophrenia, reportedly raised $65 million in a Series D venture financing from Boston-based Fidelity Biosciences. Fidelity also bought out all of EnVivo’s other investors, including BCM Technologies, Cogene Ventures, and NeuroVentures Capital, according to the report.

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