The question I get most frequently regarding Web content delivery king Akamai Technologies
I wish there were a simple answer to this one, but there isn't. Internap has long been a reseller of Akamai's services. A cordial relationship has existed between the two firms at least as long as I've owned Akamai shares, which dates back to early 2004.
Now Internap, long known for handling bandwidth, will blend VitalStream's network into its own, which would, at least in theory, substitute for the Akamai services it is selling. And that seems to be a pretty strong business. SEC filings show that Internap derived $5.2 million, or 11.8%, of its revenue in the current quarter from partners. What's more, that business was up 29.4% year over year.
Meanwhile, VitalStream has been flourishing. Revenue and gross profit have risen by a compound annual growth rate of 52.4% and 47.2%, respectively, over the past three years. And a recent deal for Eonstreams put the company front and center in enabling streamed video advertising.
So, yeah, this deal poses problems for Akamai, but they're minor in comparison with the overall opportunity. Accustream media research reports that total video streams over the Web have increased to 18 billion last year from 284.6 million during 1998. That's an average growth rate of -- wait for it -- 70% (!) annually.
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Fool contributor Tim Beyers owns shares of Akamai, which is a Motley Fool Rule Breakers selection. TiVo is a Stock Advisor pick. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. The Motley Fool's disclosure policy is a rebel with a cause.