Akamai Technologies

Group 13 AArjun P Kottana B10013Rana Md. Jamal B10043Mayank Gupta B10028Vibhu Mangla B10059

Designed to handle greatest Stresses imaginable, but demonstrated that it could handle unimaginable

- Paul Sagan, President, Akamai

Technologies

About AkamaiO 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 1999O IPO : 1999O Edge Suite 2003O Edge Computing : 2003O WTC accident – sept 11, 2001 : Impact on Akamai

O 14% drop in Akamai’s revenue from Q2-Q4,2001O Further declining in 2002O Consequences : cut headcount and expensesO Loss of confidence in investorsO 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

BottlenecksO Slow transaction processingO Loss of bandwidthO Loss of data packets (earlier – 25% to 40%)O Delays while data is resent

SolutionsO MirroringO CachingO 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 ModelMarketing

O Target 500 most heavily trafficked websitesO Content provider tagged the objects with Akamai serversO Long term contracts ( 1 to 3 years)O Switching is problem for customersO 10 times faster loadingO Cost saving (bandwidth saving for ISPs and hosts)

Network PartnersO Free space from smaller ISPsO 2001: 13000 servers, 63 countries, 95 networks

CompetitionO From caching providers, NSPs, mirroring solutionsO 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 EnvironmentFollowing the 2001 bubble burst

• Customer churn rate jumped to 22% from 11%

However existing competitors were worse off

• Content Bridge mired in members squabbles

• Smaller CDN rivals were unable to raise capital

New competitive threat – Backbone operators such as such MCI-Worldcom &

AT&T

• Because of over-capacity started delivering value-added services including content delivery

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)

EdgeSuiteIdeaO 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

Target CustomersAdvantages over

traditional CDN services

O Traditional customers with content-rich websites

O Enterprise customers that relied on Internet to distribute information and provided Web-based applications

O Better Performance in terms of speed – Atleast double on average

O Origin website cost savings - 2 year return on investment from these savings was > 100%

O Bandwidth savings – Substantial reduction in data transfer

O Scalability – Could handle ‘flash crowds’

O Security – In case of denial-of service attacks

The success early-onO 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 StageOpportunity to broaden target market beyond content driven

website to include large enterpriseDecision 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 skillDealing with corporate IT – Cost center and not a revenue

centerShift from “Nice to have” to “Need to have”First time faced with Consultative sale

EdgeSuite: Implementation StageRoles 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 2003Edgesuite 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 2004Revenue - $ 187 MOperating Income - $ 31 MEBITDA - $ 54 M

EdgeSuite: Version 3.0Edgesuite – 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?

ApplicationsO Requirements

O Sophisticated and influential early adopter

O At least 1000 customers willing to pay thousands of dollars per month

O Eligible applicationsO Dealer locators, Enterprise search, E-

commerce suites, CRM

PartnersO 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

MicrosoftO Microsoft

O Biggest customerO Decided not to enter the service

businessesO IBM

O Java based WebSphere platformO Largest resellerO Java development in Akamai was

slightly ahead of .NET

AcquisitionsO Netli (Web application accelerator)

O $177 million acquisition in 2007O Increased speed and reliability

O Acerno (Behavioral Advertising Company)O $95 million acquisition in 2008O Basis for ADS (Advertising decision

solutions)O Trying to build ADS as the third major

revenue stream

Performance so farO Revenue grew at 32%O Operating Profit Margin 26% (2009)O 28% of revenue from outside USO Avg webpage complexity doubled

and size tripledO Increasing demand of Online Videos

O Start quicklyO No delays or Rebuffering messages

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