Amazon (AMZN 2.29%) is the 800-pound gorilla of the cloud infrastructure market. Amazon Web Services captures around one-third of global spending on cloud infrastructure services and hasn't lost much ground as rivals have grown. AWS has become the standard, default choice for many enterprises, and that stranglehold will be tough to break.
That doesn't mean others aren't trying. While it will be tough for anyone to out-Amazon AWS, Cloudflare (NET 0.73%) and Akamai (AKAM -0.04%) are taking two differentiated approaches to wresting market share away from the king of cloud computing.
Cloudflare
Cloudflare is best known for securing and speeding up websites, but the company has spent the past few years building out a fast, robust, and easy-to-use developer platform. No need to worry about spinning up virtual servers; figuring out the right amount of compute, memory, and storage; and managing a fleet of infrastructure. Cloudflare handles the hard parts with its serverless platform.
At the center of Cloudflare's developer platform is Workers, which allows customers to run code across Cloudflare's global network, routing requests to the nearest location. As I write this, my latency to Cloudflare's network is 6 milliseconds. If I were to interact with an application leveraging Workers, code would run almost instantly.
Built on top of Workers is an ever-growing array of other products. For data, Cloudflare offers object storage and a full-featured SQL database solution, along with a few other odds and ends. Cloudflare Pub/Sub allows for event-driven applications, removing the need for a stand-alone message broker like Kafka. With Cloudflare's platform, it's now possible to build just about anything.
The company's platform is opinionated and offers nowhere near the number of products and features as AWS. Sometimes, you really do need to spin up a server or run a container, and Cloudflare doesn't offer the ability to do either. But as the company expands its platform with additional features, the types of workloads that could feasibly run on that platform expands, as well.
Cloudflare's developer platform is a great example of the company's optionality. It already operated a global network of edge servers handling an ever-growing chunk of global internet traffic. Leveraging that network to offer customers serverless computing solutions makes a lot of sense and has the potential to become a massive business.
Of course, it helps that the company's overall business is booming. Revenue soared 42% year over year in the fourth quarter, and the company is inching closer to turning a GAAP profit. Beyond serverless computing, Cloudflare has made a big push around Zero Trust security, a huge long-term opportunity. Altogether, the company expects its total addressable market to reach $135 billion in 2024.
Cloudflare isn't a complete replacement for AWS, but its developer platform is blossoming into a real competitor to the traditional cloud computing model.
Akamai
Akamai is best known as a leading content-delivery network provider. With the acquisition of Linode in 2022 and the recent announcement of its Connected Cloud platform, the company is aiming to become a cloud giant in its own right.
Linode is a developer-focused cloud infrastructure platform similar to DigitalOcean. It offers the standard fare of virtual servers, containers, storage, managed databases, and a handful of other products. Akamai has its eyes on leveraging Linode to create a unique cloud platform that combines the strengths of its own edge network with Linode's traditional cloud computing model.
Akamai's plan has three main parts. First, the company is building three new core cloud computing sites, adding to its existing 11 sites. An additional 10 sites are also in the works, and each will be hooked up to the company's edge network and offer a full array of cloud services.
Second, Akamai will roll out smaller distributed sites in 50 cities around the globe. The goal is to offer a subset of cloud computing services in places that are underserved by the big cloud platforms. These sites are sort of a middle ground between the big core sites and Akamai's fleet of edge sites that power its content-delivery network.
Third, Akamai will focus its pricing strategy on undercutting AWS and the other large cloud platforms on egress bandwidth fees. The company announced a halving of egress overage fees to $0.005 per GB in March for its cloud computing services. Comparisons are tricky due to the convoluted pricing schemes used by AWS, but data transfer costs from AWS to the internet can be more than 10 times as expensive as Akamai's new pricing, in some cases.
Akamai is betting that its unique approach to the cloud computing market will win over customers looking for something simpler and potentially cheaper than AWS. It may take years for the company's Connected Cloud effort to truly pay off, but it's clear Akamai's long-term ambitions go far beyond being a leader in the content-delivery network market.
