Does Akamai Plan to Kill Off The Competition and Make Matthew Prince A Genius

It’s kind of crazy but one move from Akamai can 1) increase Akamai’s CDN global market share by a hefty margin 2) kill AWS’s dreams of being a CDN juggernaut and 3) make Matthew Prince (CEO CloudFlare) a genius – although I doubt that Matthew could have known this would happen. We can all agree that CDN data transfer pricing continues to drop with no end in sight. Rumors are that for medium-volume delivery (1PB+), the price is half a penny per GB, which is equal to $5/TB/month. If Akamai really wanted to kill off CloudFront, Google CDN, Level 3 and DIY CDN in one fell swoop, it definitely could. How?

Akamai can offer $1/TB for 100TB/month with $1,000/month minimum commitment (for new clients). That would be $100 for 100TB/mo of transfer plus $900 for features. An offer like that would destroy AWS’s dreams of becoming an unstoppable force in CDN, especially since their CDN is extremely expensive. The $1,000/mo minimum commitment would siphon off the mom and pop businesses to the CloudFronts of the world. This in turn would make Matthew Prince a genius because the CloudFlare business model is immune to $1/TB.

CloudFlare has received a lot of flack from the competition because a big percentage of their customer base pays nothing. That’s right – they’re giving away CDN for free. Thus, if CloudFlare can generate $65M – $100M per year by giving away CDN services for millions of websites, then logically, they can continue to do so at $1/GB. This leaves everyone else in a scary situation.

The big question is – can Akamai do it? Two years ago, or even one year ago, I don’t think they could. Today, I believe they can. The Akamai feature set is ridiculously extensive, especially with all those acquisitions under their belt. They can give away transfer for free, and make up for it by selling high-profit margin features. And while they haven’t tried to do this yet, you can believe it’s crossed their mind a few times.

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