Who is Akamai’s Next Acquisition

Akamai recently raised $600M in a bond offering. They have $1B in cash, sitting in the bank. In 2013, Akamai recorded $1.57B in annual revenue. Prolexic adds about $60M in annual revenue to Akamai’s top line. In 2020, Akamai wants to hit the $5B annual revenue milestone, set by the previous CEO. There’s only one big problem, even if Akamai grows year-over-year 12% to 15%, it’s going to be about $1B short.

Is Akamai at a crossroads on its acquisition spree? With $1B in the bank, should Akamai buy up a few smaller security companies, that are $400M or less, or should it go for a bigger fish, and spend $1B to $2B? Imperva is too pricey now, being that it’s stock has gone through the roof.

Who is Akamai’s Next Acquisition

There is one company that can help Akamai get to the $5B milestone. It’s risky, but the payoff might be huge, beyond Akamai’s expectations, and it would totally disrupt the stable security market. The target company is private, has more than 1,000 customers, and they offer the leading endpoint and server security technology; the company is none other than Bit9.

If Akamai acquires Bit9, this action would dramatically disrupt the security landscape. Akamai will compete head-to-head with FireEye, Palo Alto, Checkpoint and Symantec. Akamai dominates the CDN industry. It can only grow as fast as the CDN market grows, and no more, and right now it’s growing about 15% yearly. However, in the security market, sky’s the limit.

Will Akamai takes the plunge and acquires Bit9? It should, but it probably won’t. The one key takeaway from this discussion, it’s easier for Akamai to enter the pure-play security space, than it is for Palo Alto, or FireEye, to enter the CDN space. The CDN space is extremely capital intensive, requires thousands of servers, POP’s all over the world, multiple connections to Tier 1 carriers, and margins are thin, unlike software.

Imperva and Incapsula Rock

That’s why Imperva and Incapsula rock big time, because they have crossed the lines, and blurred the lines between the pure-play security market, and pure-play CDN market. There’s nothing better than watching two giants, like Akamai and Imperva, enter each others market, and battle it out, gladiator style.

The CDN market needs a wake-up call, from the pure-play security companies; because CDNs are slow to innovate, compared to other verticals. However, pure-play security companies innovate at a very fast pace, making your head spin in the process. The CDN industry needs to be pushed, and bullied, so they can take innovation to the next level, and earn the respect it deserves.