Akamai
Technologies
Group 13 A
Arjun P Kottana B10013
Rana Md. Jamal B10043
Mayank Gupta B10028
Vibhu Mangla B10059
Designed to handle greatest Stresses
imaginable, but demonstrated that it
could handle unimaginable
- Paul Sagan, President,
Akamai Technologies
About Akamai
O Co founder : Danny Lewin
O Leading provider of secure, outsourced e-
business infrastructure services and software
O Serves 63 countries with 13000 servers over 954
networks (2001)
O “Content Data Network” provider
CDN to ADN
O First service : Freeflow in 1999
O IPO : 1999
O Edge Suite 2003
O Edge Computing : 2003
O WTC accident – sept 11, 2001 : Impact on Akamai
O 14% drop in Akamai’s revenue from Q2-Q4,2001
O Further declining in 2002
O Consequences : cut headcount and expenses
O Loss of confidence in investors
O Decline in stock price from $345 (in 1999) to $0.56 in Oct 2002
O Success of Edgesuite (60% of sales)– Revival of growth
O New step : into application processing tasks
Internet Architecture
Bottlenecks
O Slow transaction processing
O Loss of bandwidth
O Loss of data packets (earlier – 25% to 40%)
O Delays while data is resent
Solutions
O Mirroring
O Caching
O CDN
Content Delivery Network
Edge server
Akamai Version 1.0 : FreeFlow
O Heavy Objects are tagged and dispersed
through Edge servers
O $50 K competition to Venture
Freeflow Business Model
Marketing
O Target 500 most heavily trafficked websites
O Content provider tagged the objects with Akamai servers
O Long term contracts ( 1 to 3 years)
O Switching is problem for customers
O 10 times faster loading
O Cost saving (bandwidth saving for ISPs and hosts)
Network Partners
O Free space from smaller ISPs
O 2001: 13000 servers, 63 countries, 95 networks
Competition
O From caching providers, NSPs, mirroring solutions
O Alliance with sandpiper(another CDN provider)
FreeFlow’s Success
O Akamai enjoyed great success with FreeFlow
O Successful IPO in 1999
O 72% share of $ 125mn CDN market
The Changing Environment
New competitive threat – Backbone operators such
Following the 2001 bubble burst However existing competitors were worse off as such MCI-Worldcom & AT&T
• Customer churn • Content Bridge • Because of over-
rate jumped to mired in capacity started
22% from 11% members delivering value-
squabbles added services
• Smaller CDN including content
rivals were delivery
unable to raise
capital
Fund Shortage at Akamai
• Many Companies raised huge sums during the boom preceding the dot-com bubble burst
• However Akamai couldn’t go for secondary offerings because of SEC’s delay in approval
• Over $500mn cash outlay in Capex and losses in 2001 (In 2000, issued convertible debt
of $300mn)
EdgeSuite
Idea
O Based on Federal Express and UPS success,“a product that
would allow them to take over functions that customers
thought were strategic”
O Developed a plan that would facilitate assembly, presentation
and delivery of customer’s Internet data and applications
Edgesuite - The service created
•Employed Edge Side Includes, a mark-up language
•To accelerate the dynamic assembly and delivery of web-
based applications
For example – Airline ticket prices, stock quotes,
weather reports
Advantages over traditional CDN
Target Customers services
O Traditional customers O Better Performance in terms of
with content-rich websites speed – Atleast double on
average
O Enterprise customers that
O Origin website cost savings - 2
relied on Internet to year return on investment from
distribute information and these savings was > 100%
provided Web-based O Bandwidth savings –
applications Substantial reduction in data
transfer
O Scalability – Could handle
‘flash crowds’
O Security – In case of denial-of
service attacks
The success early-on
O Akamai anticipated Edgesuite customer to spend four times more
than they did on FreeFlow
O Better margins because existing servers installed for FreeFlow
would be used
O Complemented with FreeFlow in terms of data processing and
storage
O Accounted for 20% of revenues in Q4, 2001
O 152 customers – Almost half were new, included huge corporations
like Apple, Coca-Cola, Novartis, etc
EdgeSuite: Implementation Stage
Opportunity to broaden target market beyond content driven
website to include large enterprise
Decision to be made
• Upgrade its own sales force OR
• Rely on its resellers that had strong relationships within
the large corporation
Sales Challenge
Enterprise market required new sales skill
Dealing with corporate IT – Cost center and not a revenue
center
Shift from “Nice to have” to “Need to have”
First time faced with Consultative sale
EdgeSuite: Implementation Stage
Roles for Partners
Always relied on partners to resell “FreeFlow”
System Integrators
Hosting firms
Network carriers
Big role of Alliance partners to separate out Business Logic frm
Presentation Logic
Business Logic – How data is stored and processed?
Presentation Logic – How page components-, outputs of business logic,
are assembled by web servers and routed to users
What partners offered??
Technical expertise
Skills
Relationships in the enterprise market
Akamai did not increase its dependence on resellers
EdgeSuite: Performance through 2003
Edgesuite was successful by 2003
Accounted for 60% revenue
Customer base increased by 18%
Biggest customer – Microsoft – accounted for 20% revenue
Demise of CDN – Market share increased by 80%
14,733 servers in 1072 networks across 71 countries
Financials for Q4 2003
Revenue – $45.2 m, up by 28% (Q4 2002)
Positive Net Income for the first time
CAPEX declined by 6%, Server prices dropped sharply
FY 2004
Revenue - $ 187 M
Operating Income - $ 31 M
EBITDA - $ 54 M
EdgeSuite: Version 3.0
Edgesuite – Evolution of CDN into AND
AND Along with functionalities of CDN delivery of Application processing
and databases, e.g Online retailing transaction
In 2003
Concept to Commercial service of ADN
EdgeComputing customers could run Java Applications build on IBM’s
WebSphere software development tools from Akamai Edge servers
By 2004
Dozen customers running Java applications
Decisions faced
Which applications to focus on?
Which softwares companies should they team with?
Applications
O Requirements
O Sophisticated and influential early adopter
O At least 1000 customers willing to pay
thousands of dollars per month
O Eligible applications
O Dealer locators, Enterprise search, E-commerce
suites, CRM
Partners
O Existing software firms
O IBM (WebSphere), Microsoft (.NET), HP
(Adaptive Enterprise), Sun (ONE) etc
O Provided platforms with proprietary features
O Web Services built using other platforms
Microsoft
O Microsoft
O Biggest customer
O Decided not to enter the service businesses
O IBM
O Java based WebSphere platform
O Largest reseller
O Java development in Akamai was slightly ahead
of .NET
Acquisitions
O Netli (Web application accelerator)
O $177 million acquisition in 2007
O Increased speed and reliability
O Acerno (Behavioral Advertising Company)
O $95 million acquisition in 2008
O Basis for ADS (Advertising decision solutions)
O Trying to build ADS as the third major revenue
stream
Performance so far
O Revenue grew at 32%
O Operating Profit Margin 26% (2009)
O 28% of revenue from outside US
O Avg webpage complexity doubled and size
tripled
O Increasing demand of Online Videos
O Start quickly
O No delays or Rebuffering messages
THANK YOU
