Is This Another Serious Threat to Akamai?

Content delivery networks, or CDNs, aren't the novelties they used to be, and that's a problem for Akamai Technologies (Nasdaq: AKAM  ) .

The company best known for creating a worldwide network of servers for caching content and applications geographically close to users -- thereby substantially improving upload and download speeds -- is seeing ever more competition. Netflix (Nasdaq: NFLX  ) has decided to build its own internal CDN, for example.

But there aren't just more competitors to worry about; alternatives are also getting smarter. This week, Google (Nasdaq: GOOG  ) and privately held EdgeCast agreed to a deal that could blunt the impact of the search king's earlier deal with Cotendo, which Akamai acquired in December.

Cotendo and Google had been working together on an open-source project called "PageSpeed" for optimizing how certain technologies are rendered on a Web page, including HTML, images, CSS, and JavaScript, a common scripting language for developing cloud computing apps.

EdgeCast says it has been working with Google on PageSpeed over the past year, embedding the technology in servers at the edge of the Web, near users. The resulting improvements allow webmasters to engage in "front-end optimization," or FEO, for loading Web pages and applications faster.

For its part, EdgeCast claims to be the only one to have successfully embedded PageSpeed in such a way that site owners are freed from writing new code in order to get the benefits of a hyperfast pipe. I'll take the company at its word. But let's also remember that Akamai isn't exactly new at the FEO game. There's Cotendo's technology to consider, of course. There's also Blaze.io, an FEO specialist Akamai acquired in February. Akamai will make EdgeCast fight for every win it gets.

Even so, this isn't the first time EdgeCast has caused problems for peers. Last April, the company unveiled a CDN for application delivery and cloud computing that it said helped clients to realize 40% to 250% speed improvements. I'd expect management is after similar numbers this time, too.

And that could hurt Akamai. But if you're really itching to bet against a CDN supplier as a result of this deal, bet against Limelight Networks (Nasdaq: LLNW  ) . This would-be giant killer merits just three stars in Motley Fool CAPS because of ongoing losses and slowing revenue growth.

Cloudy with a chance of billions
It's no secret that Fool co-founder David Gardner was an early believer in the cloud computing movement that helped Akamai become a winner for Motley Fool Rule Breakers members. Want his next Big Idea? See which stock David believes in the next Rule Breaking multibagger. The report is 100% free but only for a limited time.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google and Netflix at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google and Netflix. Motley Fool newsletter services have recommended buying shares of Netflix and Google. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1926762, ~/Articles/ArticleHandler.aspx, 8/31/2014 12:49:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement