How Amazon and Limelight Are Attacking Akamai

There's a lot to like about Akamai Technologies' (Nasdaq: AKAM  ) business.

We know because competitors are hungering for a slice of its share of the content delivery networking (CDN) market. On Monday, Limelight Networks (Nasdaq: LLNW  ) spent $110 million in cash and stock to acquire EyeWonder, a service for digitally delivering ads. Akamai's related offering is called Advertising Decision Solutions.

More importantly, Amazon.com (Nasdaq: AMZN  ) last week announced a plan to stream audio and video via its CloudFront CDN. Industry watcher Dan Rayburn describes the threat the new service could be to both Akamai and Limelight in this blog post:

Amazon does have the potential to take many of the mid-sized customers who spend between $3-5k a month on video," Rayburn writes. "That's Amazon's sweet spot and there are a lot of those customers in the market with the major CDNs.

Dan's right. Amazon's entry won't make it easier on Akamai, and EyeWonder makes Limelight a more serious threat. I'd be more worried if Akamai were a static business, but that's not the case.

Akamai recently announced a plan to implement what it calls Web Application Firewall to help stiff-arm digital threats at their source, in the cloud. Neither Limelight nor Level 3 (Nasdaq: LVLT  ) offers a similar service at the moment. Cisco (Nasdaq: CSCO  ) and perhaps McAfee (NYSE: MFE  ) are Akamai's closest comparables in this area.

So long as Akamai continues to build its stack of services in this way -- and so long as those services are more desirable than open-source or lower-priced alternatives -- Akamai should continue to flourish.

I've had my say. Now it's your turn. Will these moves by Limelight, Amazon, and others force Akamai from the content delivery spotlight? Please vote in the poll below. You can also weigh in with a comment or two, and benefit a great cause in the process.

Akamai is a Motley Fool Rule Breakers recommendation. Amazon.com is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers owned shares of Akamai at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy needs a new snow shovel.


Read/Post Comments (4) | Recommend This Article (4)

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.

  • Report this Comment On December 23, 2009, at 5:01 PM, spamcop wrote:

    Maybe another look at what a web application firewall is would be in order.

  • Report this Comment On December 23, 2009, at 11:35 PM, palfieri wrote:

    EyeWonder and Akamai's Advertising Decision Solutions solve two completely different problems. ADS (formerly acerno) is behavioral targeting. EyeWonder is rich media ad placement. They do not compete.

  • Report this Comment On December 24, 2009, at 6:54 AM, TMFMileHigh wrote:

    Hello palfieri,

    Actually, ADS doesn't just equal acerno, though it is accurate to say that behavioral targeting is part of what ADS does. Akamai is delivering ads as well as learning from the data it delivers.

    Limelight may not have similar analytics, but EyeWonder should bolster its delivery platform. I believe that constitutes a competitive threat.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On December 24, 2009, at 11:05 AM, jolaz wrote:

    So let me get this straight. Akamai is trying to gain a competitive advantage in a market where anyone with half a brain can receive whatever they are offering for free? I don't know much about computers, but I do know this. I don't subscribe to cable because I can watch virtually every sporting event around the world in HD for free via the internet.

    This past year I bought and sold LLNW for a small profit. The reason I bought it was because of their connection to Goldman Sachs. With this EyeWonder acquisition, I'd just venture to say that LLNW has an ace up their sleeve.

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