An Oppenheimer analyst stated that “Akamai would be a viable acquisition target for Microsoft as it looks to compete with AWS in the public cloud space.” One thing is for sure, if this were to happen, the excitement factor in the CDN industry would quadruple, and the ripple effects around the world would fatten the wallets of many startup CDNs. Disclaimer: I’m not a financial analyst so don’t use this rant for investment purposes:
Here Are Some Possible Outcomes
- Microsoft and Akamai would become a formidable foe to Amazon. In one fell swoop, Microsoft would leap frog Amazon in all things content delivery once and for all
- A Microsoft + Akamai combo would result in zero incremental revenue gains over a 2-3 years for this venture, because Akamai would lose customers, as they flee the corporate giant, and Microsoft would add CDN customers so the net effect is zero
- The Enterprise CDN space is all about relationships and old fashion selling. In the Azure world, its about selling cloud products online. Thus, there will be a clash of business models. CDN customers are very finicky so this would be a net gain to the CDN pure-play industry
- Microsoft acquiring Akamai would be akin to Santa Clause delivering presents to the pure-play CDN industry. Is it possible Akamai loses $500M of the $2B+ annual revenue if it gets acquired? Sure
- The majority of lost revenue would go into the pockets of the startup CDNs. Not Level 3 because their feature set is limited. Not Verizon, because who knows what will become of EdgeCast in 2 years. Not Amazon, because they’re not an A Player. Not Google for the same reasons as Amazon.
Limelight is a way better deal for Microsoft. Its a cheaper acquisition compared to Akamai, and Limelight Networks still has one of the largest global CDN infrastructures in the world. What would we personally want to happen? Microsoft acquiring Akamai would be so awesome for two reasons: 1) CDN sales revenue would rain down on folks like Fastly, CloudFlare, etc. 2) There would be a mass exodus of talent from Akamai into the startup ranks, who would usher a new era in Internet delivery protocols technologies. Akamai should have been the AWS of the cloud industry since they were the Internet many years ago.
