Akamais Edge

Universiti Utara Malaysia

BDMX8013 Business Consultancy Strategy By Rodziah Ahmad (S93935) Session 2013/2014 Semester 1

Business Issue
Pricing on the newly introduced advanced product. Companys strategy for online video. Decentralized or centralized network structure.

Introduction
The business starts to face problems in 2009 due to rising numbers of competitors (fivefold compare to two years back) in online content delivery. Tight competition due to online video demand. Akamai has undercut price to half and demands from existing customers were slower. CEO of Akamai since 2005, Paul Sagan has to decide to determine direction for Akamai for the next 5-10 years.

Business Analysis- Content Delivery Network (CDNs)

Internet Delays and Congestion
EXHIBIT 1

 When users login and requesting data (red line) to any companys server, via Internet Service Provider (ISP), the data will be transported again (red dotted line). Sometimes, when an internet server or line was broken or overloaded, the data will be lost. The companys server can detect whether the data requested are displayed in the users screen. If it cannot detect the recipient signal, it would resend the data until the confirmation arrived or it concluded there was fundamental problem. Detection and recovery system makes the system slow.

To overcome, network operators had cooperative agreement among themselves for peering but it increased the delays over long distance data connection.

Content Delivery Networks (as solution)

CDNs idea : place network of servers in strategic location as Akamai has the largest network around the globe.

 CDN provider sold their services to companies to improve performance of their website. The contents will be parked at the server close to most congested users (Example: Asias users will be directed to Japans server, rather than server in San Francisco, etc.) They had succeed in accelerating their clients webpage and reduced internet congestion.

NEW PROBLEM: Dynamic webpages , real time. Therefore, decentralized server is not suitable. Faster and more reliable centralized servers are required.

Typical CDN Operations

Basic CDN requires:
1. A network of servers to store and process the data 2. Software to run the servers and network

3. Bandwith

History of Akamai
Founded in 1998 (Tom Leighton, Mathematics professor at MIT and his PhD student, Denny Lewin) Objective: to come up with solutions for the internets delay and congestion problems. Funding by venture capitalist Battery Ventures and Polaris Venture Partners. Akamai became market leader. IPO in 1999. 2009, Akamai was the market leading for CDN. 60% market share in revenue; 60,000 servers in approximately 1,000 networks around the world; 1,700 employees.

Akamai handled 15-30% of all web traffic.

The Edge (highly distributed computing network)

Akamai Decentralized server Vs. OTHER CDNs - Centralized server Advantage: real-time knowledge of the traffic solution => faster response times and lower error rates. Benefits of decentralized network has brought issues:
1. Different customers valued fast response times differently. 2. Quantify the effect of the network design. 3. More uncertainty how demand and technologies would evolve. 4. Costly software development and control.

Akamais Product Line

was build up on three technologies Technologies
Distributed (static) content delivery

Product Lines
Specific content delivery

Specific Products
HTTP Content Delivery, Streaming, HTTP download, FTP downloads, License Delivery, Net storage

Distributed computing

Complete Website delivery

Dynamic Site Accelerator, EdgeComputing

Application acceleration Accelerated data communication Other

Web application accelerator, IP application Accelerator

Technology essential for product Technology enhances product

Global traffic management , EdgeScape, Enhanced DNS, Consulting

The Competition
Akamai received competition from: Standalone CDNs: At the height of internet bubble, there were more than 50 companies providing CDN services. Major competitor, Limelight focus on content delivery mainly for media and entertainment segment. To sustain its market share, Akamai had Intellectual Property on all its three technologies. Telecom networks: Example, AT&T (telecommunication provider) has set of customers and they offer content delivery only. Potential CDN customer themselves: such as Microsoft whom build up their own CDN server.

The Market for CDN Services

Any firm requires website. Particularly can be divided into 4 segments: Media & Entertainment: Largest segment (40-45% Akamais revenue) and most competition. High content requirement. E-commerce: (30% revenue). Requires more dynamic site and application acceleration. High-tech: (20% revenue).
Companies that sold software and updates were downloaded over internet.

Companies selling software as a cloud computing service.

Companies that requires acceleration for their internet-based enterprise software. Example, Internet-based logistic system.

Government agencies (5% revenue)

The Immediate Challenges

To anticipated growth in video streaming:
Growth: From great to spectacular and requires heavy investment. Should Akamai invest or wait for the evolution of internet?

Longer-term issue:
Should Akamai stick with current distributed Edge network or shift to centralized structure?

Akamais Today (www.akamai.com)

The product has been segmented into 5 solutions:

Aqua Web Solutions

Grow revenue opportunities with fast, personalized web experiences, and optimize customers Web site for mobile users.

Sola Media Solutions

Terra Enterprise Solutions Kona Security Solutions Aura Network Solutions

Engage audiences with superior quality video, solve the challenges of multi-device consumption and reinvent the software distribution channel. Engage audiences with superior quality video, solve the challenges of multi-device consumption and reinvent the software distribution channel. Designed to provide superior cloud computing security, prevent data theft and downtime and mitigate Denial of Service attacks by extending the security perimeter outside the data centre. Operate a cost efficient network that capitalizes on traffic growth and new subscriber services without the complexity of building a CDN and interconnecting it across providers.