Akamai has 100% penetration into the Fortune 1000, or very close to it. In addition, they have 100 of the top banks, government agencies, the largest media companies in the world, and so on. If you break down Akamai’s annual revenue by its entire customer base, the monthly billing per customer is likely to be $25k to $30k ($1.579B Sales /5k Clients / 12 Months) range. Many of Akamai’s customers spend tens of millions of dollars on IT every year, with some spending more than $100M annually. The market is there, and so is the IT spend that can help Akamai reach the $5B annual revenue milestone. Akamai just needs to capture more of the IT spend from existing customers.
How can Akamai do that when the CDN market is small? Akamai needs to make multiple acquisitions inside and outside the CDN ecosystem, in order to help Akamai build a bigger product portfolio, with part of that portfolio being in the non-traditional CDN services, but that can still leverage Akamai’s global network. The three specific areas that are a good fit for Akamai are Video, Security and WAN. In regards to video, Akamai’s new offering called Cloud Workflow incorporates Aspera UDP file transfer technology into Akamai Intelligent Platform, enabling customers to upload large files at 10x to 50x faster speeds than FTP. However, the Content Workflow platform doesn’t go deep enough into the internal-workings of studios, broadcasters and the professional filmmaker.
The Akamai solution only touches the professional filmmaker environment from the outside, at the edge. Akamai needs to go deeper, and become part of the workflow for the filmmaker. The best way for Akamai to do this is to acquire Signiant. Signiant is the last independent leader in the UDP file transfer niche. Signiant goes deep into the workflow processes of studios, broadcasters and media distributors. They have great technology, and a big media customer base. Signiant would be a solid acquisition for Akamai, and best off all, it would be affordable. Signiant is a big fish in a small pond offering a niche product.
How big is the high speed file transfer market? If I were to guess I would say it’s between $40M to $60M annually, with Aspera and Signiant owning the lions share. An Akamai acquisition would immediately catapult Akamai deep into the workflow processes of the largest media companies worldwide. My guess is that Signiant generates about $15M in annual revenues. An Akamai + Signiant combo would be a compelling proposition for broadcasters and filmmakers worldwide, whether the filmmakers is involved in creating linear broadcast, episodic, or feature films.
In one fell swoop, Akamai becomes a B2B content exchange platform that’s deeply embedded into the worlds largest media company workflows. Once Akamai becomes an integral component of the media workflow, than it can expand and go after the bigger pie, storage. Every large media company has PB’s of storage in large media files. One feature film can exceed several hundred TB’s of storage. A big part of it sits on Isilon type hardware, and another part in tape backup. Thus, a Signiant acquisition opens the door for Akamai to attack the storage niche within media companies. Without Signiant, capturing the storage piece is difficult because workflows and storage go hand-in-hand. The media storage segment can add significant revenue to Akamai’s top line, maybe several hundred million dollars worth. Continued in Part 3.