Looking back at EdgeCast and Prolexic Acquisitions


December marks the one year anniversary in which Prolexic and EdgeCast were acquired. Akamai paid $370M for Prolexic, and Verizon paid $350M for EdgeCast. Both were sound acquisitions, which expanded the feature sets of Akamai and Verizon, and plugged a hole in their product lineup. When the news broke out that Akamai acquired Prolexic, it was the best acquisition Akamai had made in years. However, four weeks later when Verizon announced the acquisition of EdgeCast, one can say it definitely killed the buzz around the Akamai-Prolexic acquisition. Both acquisitions marked a major milestone in the CDN industry.

First, the Prolexic acquisition highlighted a new trend in the CDN Ecosystem – CDNs now compete directly with security hardware manufacturers such as F5 Networks, Barracuda Networks, Cisco, and to some extent Palo Alto Networks. Verizon’s acquisition marked a major shift in the Telco world, being that Verizon is now the the first Last Mile Tier 1 Carrier to compete directly with Akamai. The good news for Akamai, there was only one EdgeCast, so Akamai doesn’t have to worry about competing with other carriers such as Telefonica, DT, BT or NTT.

Should Have Akamai Acquired EdgeCast Before Prolexic

Looking back, Akamai made the right choice in acquiring Prolexic, but the hands-down better acquisition would have been EdgeCast. Akamai should have acquired EdgeCast first, and knocked off the only CDN that could match it on a feature by feature basis and scale. Now, Akamai must compete with a new EdgeCast that is backed by financial wherewithal of one of the largest Carriers in the world. Akamai continues to do well, and will continue to do so in the future, as the overall CDN market continues to grow at a healthy clip. But Verizon EdgeCast is now a thorn in Akamai’s side, and from what I hear on the street, EdgeCast and Akamai are duking it out in many big accounts.

The reason Akamai acquired Prolexic is because of Wall Street. Wall Street puts a higher premium on Akamai selling higher profit margin security business, than selling more CDN services. However, Prolexic would have been there a year later have the acquisition not occurred. The DDoS Mitigation Service Providers without CDN infrastructure are headed for some tough times.

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