Continuous Evolution: In Acquiring Linode, Akamai Looks To Transform Again
Akamai’s announcement last month that it had acquired infrastructure-as-a-service (IaaS) provider Linode addresses a gap in Akamai’s offering and presents an opportunity to disrupt traditional cloud service providers. Akamai’s edge function-as-a-service (FaaS) technology gives companies the ability to manipulate content close to the user with very low latency, but organizations still need to go back to their own data center or a cloud provider for storage, compute, databases, and workflows — all of which can add unwanted time. Linode fills this need, allowing developers to build, launch, and scale applications at Akamai’s edge, across cloud providers, and in their own data centers.
Can Akamai Transform Into A Cloud Platform?
Attempts to transform and move into brand-new markets are often fraught. For every success story, such as Nintendo’s pivot from playing cards to video games, there are those that illustrate just how difficult a move like this is, such as US telecommunication providers that failed to make the jump to a principal cloud provider. However, Akamai has a big advantage: It’s made this kind of transformation before. Starting as a content delivery network (CDN) in the late 1990s, Akamai quickly became the dominant provider for video, livestreaming, gaming, software downloads, social media, and e-commerce sites. Akamai today is known as much for its security services (it is a top player in the web application firewall, bot management, API security, and client-side code protection spaces) as it is for its content delivery capabilities. In fact, recent earnings state that Akamai’s Security Technology Group has experienced much higher growth than its Edge Technology Group. Akamai’s successful pivot to a trusted security provider bodes well for its progression into a cloud platform.
How Does This Align With Akamai’s Existing Offering?
The acquisition could help Akamai compete against hyperscale clouds such as Amazon Web Services (AWS) that have been moving compute to the edge with various offerings. The new union doesn’t have the over 200 cloud services features AWS offers, but for those customers looking for extra compute and leading security offerings, Akamai’s trusted security services coupled with Linode’s IaaS are a promising combination. Customers looking at the unified solution will want to ask Akamai how easily the security tools integrate with the IaaS platform.
What About The Competitive Dynamics?
As mentioned, most cloud service providers lack Akamai’s security depth, but even with Linode, Akamai will need to continue to invest to match the cloud platform leaders in strategic services while sidestepping unwinnable service-by-service competition. Another thing to watch for: the future of Akamai’s edge FaaS competitors, some of which use Linode services to provide a more comprehensive solution to their customers. How long will those competitors continue to use Linode? Will Akamai adopt a “coopetition” mindset and continue to support its competitors on Linode? Linode users on other FaaS platforms will want to ask their vendors about their future plans with Linode and Akamai.
For more information on what we see for this acquisition and Akamai in general, schedule an inquiry with myself, Sandy, or Lee.