Billion Dollar Idea for CDNs: Part 1

Finding the next billion dollar idea in the CDN industry is proving difficult. So far, no one has done it yet. Akamai, Limelight & EdgeCast, are the only three CDNs with the financial resources, R&D, and technical know-how, to be able to do it someday. Paul Sagan, the previous CEO of Akamai, set a milestone of $5B in annual revenue by 2020.

If Akamai grows 10% per year for the next 6 years, it will reach $3.2B in annual revenue. Throw in a few acquisitions over the next 6 years, and Akamai might be able to find another $500M to $1B in revenue. That leaves it $1B short of its milestone. With this in mind, Akamai’s Product Management team is working feverishly to develop the next big idea. Is the next big idea likely to come from a new feature in streaming, web app acceleration, mobile app acceleration, DSA, or cloud security?

Akamai & Cisco Partnership

The new Akamai/Cisco partnership aims to put Akamai functionality into the Cisco branch routers, thus extending the Akamai CDN to the last mile, or the first mile. The Cisco partnership has the potential to be a large source of revenue for Akamai. But, let’s be realistic, Akamai can only move as fast as Cisco’s slowest link. With $50B in annual revenue and 75,000 employees, Cisco’s slowest link is 3-7 years.

In my simplistic view, the partnership positively impacts Akamai more than Cisco. Even if Cisco made an extra few hundred million dollars per year on this partnership, it wouldn’t make a dent in Cisco’s armor. Thus, does Cisco have an incentive to push this partnership through quickly? Hard to say. Akamai, is going to have to think outside the CDN box, in order to develop a technology that has the potential to generate $1B in annual revenue or more.

The first place to look is outside of the CDN industry. Find out what companies are hot, and what they are doing. Then, if the hot product is something that can be done by Akamai, then bring it in-house, or acquire it. Thereafter, throw a bunch of developers at it and see what happens. Currently, there is one hot company on fire. So much so that a whole new crop of startups are entering the space. This product, has to do with security, data, reporting, systems, networks, and everything that Akamai excels at. I’ll discuss them in my next post.