Is Akamai Second Guessing Prolexic Acquisition


Akamai’s acquisition of Prolexic was genius. Prolexic is one of the leading cloud-based security companies offering DDOS protection. Their infrastructure consist of the following: global POPs, Tier 1 connectivity with multiple carriers, massive hardware deployment, custom applications for monitoring, alerting & traffic filtering, and a highly skilled workforce. On top of that, they have a large base of enterprise customers.

The most important asset is the workforce. Prolexic employs top notch security engineers, consultants, sales reps and management. They are focused on the nuts and bolts of security and DDOS protection. Now all this talent and product depth belongs to Akamai.

For Akamai, this was a time to celebrate. Before the acquisition, no other CDN came close to Akamai’s security offering. The acquisition made it more difficult for the competition. But sometimes celebrations are short lived and this was definitely one of them.

The question now arises, is Akamai second guessing their Prolexic acquisition? I think they are.

Did Akamai make the right choice acquiring Prolexic before EdgeCast?   In my opinion no.

Akamai should have acquired EdgeCast before Prolexic. Akamai is the only CDN with the money to buy Prolexic. No other CDN has the cash to do it. So no threat there.

And if another company like AT&T or IBM acquired Prolexic, they still wouldn’t be a threat to Akamai’s CDN business. There’s also a big chance that Prolexic would have been there for the acquiring 12 months down the road.

The Verizon acquisition definitely changed the picture. Akamai should have acquired EdgeCast and eliminated the only CDN that could have taken on Akamai head-to-head from a product and sales standpoint. Akamai would have created a bigger gap between the #1 and #2 CDN.

Akamai now has a more formidable competitor. When Verizon invest a few hundred million in EdgeCast, their infrastructure, engineering and salesforce is going to increase dramatically. Besides facing a cash rich CDN, Akamai stands to lose a significant amount of annual revenue from Verizon.

It’s going to be interesting to see how Akamai responds and prepares for the fight ahead. One thing is for sure, they aren’t going to sit down and do nothing. History is on their side.

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