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Akamai Turns 10

Content delivery pioneer Akamai Technologies (AKAM) is celebrating the company's 10th anniversary today, and has published a Netrospective that highlights many of the major Internet traffic milestones over the past decade, from the famed Victoria's Secret Web traffic jam in 1999 right through the recent Middle East cable cuts.

Akamai's infrastructure has grown to the point where it has 30,000 servers in 70 countries within nearly 1,000 networks. The company estimates that 85 percent of the world's Internet users are within a single "network hop" of an Akamai server. That infrastructure serves more than 300 billion requests per day, according to a company fact sheet.

Posted by Rich Miller April 07, 2008 | Permalink | Newsletter

March 03, 2008

Akamai Had Hoped for $100M-Plus Award

Xconomy has some additional details about Friday's jury verdict that awarded Akamai (AKAM) $45 million in damages from Limelight Networks (LLNW) in a patent dispute. The jury found that Limelight's content delivery technology infringed on Akamai patent 6,108,703, known in the industry as the "703" patent. Xconomy reports that the verdict "was not the huge win Akamai hoped it would be" since additional elements of the company’s case against Limelight had been thrown out weeks earlier. An excerpt:

Akamai had hoped for a much larger damage award, according to (Akamai spokesman Jeff) Young. "I can’t really comment on the specific amount, but we believe the evidence showed at least a nine-figure damage number."

Nine figures is $100 million. Instead, the jury found damages to Akamai of $45.5 million, including $40.1 million for profits lost as a result of Limelight’s infringement, a royalty of $1.4 million, and a further $4 million to compensate Akamai for price erosion caused by competition from Limelight. Xconomy has obtained the jury form that itemizes the verdict, and posted it online.

Posted by Rich Miller March 03, 2008 | Permalink | Newsletter

February 29, 2008

Akamai Wins Patent Case With Limelight

Akamai Technologies (AKAM) has prevailed in its patent infringement case with rival Limelight Networks (LLNW), which has been ordered to pay damages of $45.5 million, Akamai announced today. Shares of Limelight plunged $1.97 to $4.40 a share after the ruling was announced, a drop of 31 percent. Akamai jumped $2.43 to $35.91, a jump of 7.3 percent, in late afternoon trading. Akamai said it will ask the Court to issue a permanent injunction prohibiting Limelight from infringing the patents, which Limelight has said could force it to shut down its CDN service.

"We are extremely pleased with the jury’s verdict," said Melanie Haratunian, senior vice president and general counsel of Akamai. "Today’s ruling recognizes the strength of Akamai’s patent portfolio and is a tangible reflection of our resolve to vigorously defend the Company’s intellectual property."

"We are disappointed with the jury's verdict in this matter," said Phil Maynard, chief legal counsel for Limelight. "We strongly believe that, like other companies that follow long-established Internet standards, we do not infringe the patent in this case. We will continue to remain a competitive choice in the marketplace as we pursue all appropriate legal avenues."

In its most recent SEC filing, Limelight stated that "an unfavorable outcome could seriously impact the Company’s ability to conduct business" and that "a permanent injunction could prevent us from operating our CDN altogether."

Posted by Rich Miller February 29, 2008 | Permalink | Newsletter

February 07, 2008

Akamai Gains on Strong Earnings

Shares of Akamai (AKAM) surged higher today, boosted by a strong earnings report and evidence that concerns about price wars in the content delivery market are overblown. Akamai shares rose $2.68 to close at $32.41, a gain of 9 percent on the day.

On Wednesday Akamai reported that its annual revenue grew 48 percent in 2007, with revenues of $636 million for the year. Despite growing competition in the CDN market, customers are spending more money with Akamai, with average revenue per customer up 12 percent from the previous quarter and 22 percent from the year-earlier period. Akamai now has more than 100 customers who spend more than $1 million a year on its services.

Akamai customers are spending more because their businesses are growing. "As more and more entertainment content and games are going online, it drove really tremendous results for us," President and CEO Paul Sagan said during Akamai's earnings call with analysts. "We saw it across many verticals, but the two most important were e-commerce and the media and entertainment, even beyond expectations. I think that we are seeing a steady growth of entertainment content moving to an IP world. I just think you continue to see adoption of the Internet and it creates this virtuous spiral upwards right now."

Posted by Rich Miller February 07, 2008 | Permalink | Newsletter

February 05, 2008

Akamai-Limelight Suit Streamlined

Dan Rayburn at the Business of Online Video reports a development in the patent infringement lawsuit between Akamai (AKAM) and Limelight Networks (LLNW), the two leading players in the content delivery network business. Dan says the court has streamlined the case, issuing a preliminary ruling focusing on a single Akamai patent, effectively setting aside issues related to two other patents. We'll update once more information is available.

Posted by Rich Miller February 05, 2008 | Permalink | Newsletter

January 24, 2008

Akamai: 1M Social Media Requests a Second

Akamai Technologies (AKAM), the leading content delivery network, said today that traffic from social media sites on its platform now exceeds more than 1 million requests per second. The new data was included in a press release from Akamai touting the growth of its social media business. Akamai works with a lengthy list of leading social media destination sites, including Facebook, MySpace, Bebo, Friendster and Metacafe.

Akamai said several of its fastest-growing customers are not the social networks themselves, but content providers creating widgets that are distributed on Facebook, MySpace or other social networks. One is Slide, which is the leading application provider on Facebook with more than 50 million unique users each month. The company's popular widgets include Slideshows, FunWall and Super Poke.

"Traffic to the Slide network has grown more than 500 percent this past year," said Ken Brownfield, Director of IT at Slide. "Our already heavily-tuned load times were decreased by an additional 50 to 75 percent by utilizing Akamai, which is critical for an ideal user experience."

Posted by Rich Miller January 24, 2008 | Permalink | Newsletter

October 25, 2007

Report: Akamai To Announce P2P Service

Here's an interesting example of how a blog post can uncover information about a widely-followed public company: Yesterday Dan Rayburn wrote a post titled "Is Akamai Announcing a new P2P Delivery Service Next Week?" The post addressed speculation that Akamai (AKAM), the leading content delivery network, was set to unveil an attention-getting new service during its company analyst summit.

Within hours, Dan had heard from several Akamai customers saying the company is issuing invitations to a Nov. 6 event announcing the launch of the P2P delivery service.

In its quarterly analyst call yesterday afternoon, Akamai president and CEO Paul Sagan was asked about the reports of a P2P offering. Sagan noted that Akamai has been public about its interest in the peer-to-peer market (which Akamai refers to as "client delivery") but "we don't have any product or service announcements to make right now."

Posted by Rich Miller October 25, 2007 | Permalink | Newsletter

October 22, 2007

Akamai's Leighton on CDN Competition

Sramana Mitra on Strategy has an interview with Tom Leighton, the co-founder and Chief Scientist at Akamai Technologies (AKAM) in which Leighton discusses how Akamai is positioned to benefit from growth in the online video, as well as the recent competition from Level 3 and other new CDN providers.

As we noted recently, Akamai's approach to competition has been to invoke the superiority of its network and edge-based approach to content delivery. Leighton goes into some on this point:

I think there have always been companies doing the core data center approach. It is easy to do. You buy servers, stick them in a data center, give it transit. You can start a company very easily with that model. There are probably two dozen companies, a dozen of which started in the last year, doing just that. It is quick, dirty and cheap. You then find out your quality is not good ... If you are trying to deliver video from the data centers, say 20 data centers around the world, for a lot of the end users, you won’t even be able to deliver TV quality, let alone DVD or HD.

Leighton says one of Akamai's key advantages is its relationships with hundreds of ISPs that house Akamai servers on their networks.

Posted by Rich Miller October 22, 2007 | Permalink | Newsletter

October 11, 2007

Analysts Warm to Akamai After Rebound

Shares of Akamai (AKAM) have rebounded this week after the company announced a new service to help enterprises deliver business applications. Akamai closed Wednesday at $37.13 a share, a gain of 23.7 percent from its close of $30.01 last Thursday. The improvement has prompted support from some securities analysts, who have been concerned that Akamai might be hurt by competition in the content delivery network (CDN) market from rivals including Limelight Networks (LLNW) and Level 3 (LVLT).

On Wednesday American Technology Research analyst Rob Sanderson started coverage of Akamai with a buy rating, advising clients to buy the stock ahead of earnings on October 24. "We think fundamentals are not as bad as feared and expect guidance will be in-line or better than current consensus," a combination he thinks can provide a catalyst for the stock, according to Barron's Tech Trader Daily.

Posted by Rich Miller October 11, 2007 | Permalink | Newsletter

October 02, 2007

Baseball Playoffs Boost Akamai Shares

Why is the stock of content delivery network Akamai (AKAM) surging today? Akamai shares are up $2.22 (7.8 percent) to $30.97 a share, apparently because Wall Street traders see benefits for Akamai's bottom line in strong traffic at MLB.com . Nearly 3 million people accessed the video stream of Monday's one-game National League wildcard playoff game between the San Diego Padres and Colorado Rockies on MLB.TV, which uses Akamai for its streaming media delivery.

September's tight pennant races generated huge traffic for MLB.com, which had more than 2.7 billion page views and 61 million unique visitors for the month, according to Major League Baseball. That will be welcome news to Akamai shareholders. Unless they're also Mets fans, in which case they're probably still inconsolable.

Posted by Rich Miller October 02, 2007 | Permalink | Newsletter

September 20, 2007

Akamai Dips on Analyst Pessimism

Shares of Akamai Technologies (AKAM) are lower today after an analyst issued a "sell" recommendation on the stock, saying competitors were likely to erode a key revenue niche for the content delivery network (CDN) market leader. Shares of Akamai closed at $30.37, down $1.89 for a drop of 5.9 percent on the day.

Kaufman Brothers analyst Sameet Sinha said that the competitive dynamics in the CDN market are ready to change. "There is an influx of new entrants into the space, especially in the media and entertainment" segment, which makes up 40% of Akami's sales, Sinha wrote in a research note. Factors include the recent entry of newcomers EdgeCast and Panther Express, the IPO of Limelight Networks (LLNW) and the launch of a CDN offering from Level 3 (LVLT).

Posted by Rich Miller September 20, 2007 | Permalink | Newsletter

August 28, 2007

Akamai: We're Ready for HD Internet Video

Now that Internet video is an everyday part of Web life, what's the next frontier? Content delivery network market leader Akamai Technologies (AKAM) issued a release yesterday touting its readiness for high-definition Internet video delivery. Akamai's says data from its existing users demonstrates that "a consistent, high-definition video experience is now possible" using its CDN network.

"The capacity to deliver high throughput files already exists at the 'edge' - leveraging the massive build-outs occurring in hundreds of individual networks," said Mike Afergan, chief technology officer of Akamai. "For example, on our distributed platform, we serve more than half of all the files, 500 MB or greater, at more than 1.4 Mbps, and this is only increasing. This demonstrates that, by leveraging the right architecture, there are already a large number of end-users capable of downloading higher quality content. We are just at the beginning of a very exciting market opportunity for delivering premium HD content."

A 2-hour feature-length HD movie would need to be encoded at a bit rate of at least 6-8 Mbps, according to Akamai, which would result in the file being a size of 5-8 GB. Delivering that file to an audience equivalent to one Nielsen ratings point (1.1 million households) would require 6.6 Terabits of sustained bandwidth, the company said.

Posted by Rich Miller August 28, 2007 | Permalink | Newsletter

July 30, 2007

Rayburn: CDN Market Remains Strong

Dan Rayburn, a veteran observer of the online video market, says that he's been getting a flurry of calls from analysts about the sharp downturn in shares of Akamai. The leader in the content delivery network (CDN) market saw its share price drop from $47 to about $37 after its earnings report disappointed analysts. The big question: does the collapse of Akamai (AKAM) shares represent an erosion in business conditions for CDN providers?

"The simple answer is no," Dan responds, noting that analysts are focusing on quarter-to-quarter trends within Akamai's earnings that may not reflect progress in the broader market, or even the full mix of services the company is offering. I think it's also likely that analysts are squinting harder at Akamai's financials in the wake of the IPO by Limelight Networks (LLNW) and the entry of Korea's CDNetworks into the U.S. market. Dan writes:

My suggestion: relax. This is not the first time this has happened where a company that provides services in the online video industry has seen a major change in their stock price and it won't be the last time either. The content delivery market is as healthy as ever and the growth of the consumption of online video for longer time, more frequently, at higher bitrates and on multiple devices shows no signs of slowing down.

Rayburn also critiques a Barron's article over the weekend that highlights the progress of Internap (INAP) in the CDN market.

Posted by Rich Miller July 30, 2007 | Permalink | Newsletter