Tuesday, December 18, 2007

Looking at Akamai's Competition

Talking to a well-known VC yesterday, the subject of Akamai came up... I suggested that they may be one of our region's new pillar companies; he argued that Akamai is facing scads of competition, and hasn't been as quick to develop new services, or buy rivals, as it should be. His view was that Akamai's moment in the sun may be a fleeting one.

My Globe colleague Hiawatha Bray has already been thinking about this topic; a story of his that ran yesterday was headlined, 'Akamai's Competition Grows in the Data Delivery Business.' It's worth a read. Here's an excerpt:

    ...the market has had a jaundiced view of Akamai for much of the year. Akamai's shares traded above $59 in February, but have slumped to around $35. Investors haven't taken much comfort in the company's solid financial performance.

    ..."Everybody's been piling into this space," said Melanie Posey, an industry analyst at IDC Corp. in New York. "A lot of the new companies, and also some of the network providers, are stepping up their efforts."

    Last December, Level 3 Communications Inc., a major Internet service provider, made its move into the space by purchasing the content delivery business of Savvis Inc. Limelight Networks Inc., a major Akamai rival with about 10 percent of the market, went public in June, and in August disclosed a major deal to deliver Internet music, video software, and games for Microsoft Corp.

    There are plenty of other smaller competitors, including Mirror Image Internet Inc. of Tewksbury, a privately held firm that entered the content delivery service in 1997, at about the same time as Akamai. Mirror Image handles streaming video for The New York Times Co., the Home Shopping Network, and a variety of local television stations in the United States.

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