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Akamai Technologies
Group 13 AArjun P Kottana B10013Rana Md. Jamal B10043Mayank Gupta B10028Vibhu Mangla B10059
Designed to handle greatest Stresses imaginable, but demonstrated that it could handle unimaginable
- Paul Sagan, President, Akamai
Technologies
About AkamaiO Co founder : Danny Lewin
O Leading provider of secure, outsourced e-business infrastructure services and software
O Serves 63 countries with 13000 servers over 954 networks (2001)
O “Content Data Network” provider
CDN to ADN
O First service : Freeflow in 1999O IPO : 1999O Edge Suite 2003O Edge Computing : 2003O WTC accident – sept 11, 2001 : Impact on Akamai
O 14% drop in Akamai’s revenue from Q2-Q4,2001O Further declining in 2002O Consequences : cut headcount and expensesO Loss of confidence in investorsO Decline in stock price from $345 (in 1999) to $0.56 in Oct 2002
O Success of Edgesuite (60% of sales)– Revival of growth
O New step : into application processing tasks
Internet Architecture
BottlenecksO Slow transaction processingO Loss of bandwidthO Loss of data packets (earlier – 25% to 40%)O Delays while data is resent
SolutionsO MirroringO CachingO CDN
Content Delivery Network
Edge server
Akamai Version 1.0 : FreeFlow
O Heavy Objects are tagged and dispersed through Edge servers
O $50 K competition to Venture
Freeflow Business ModelMarketing
O Target 500 most heavily trafficked websitesO Content provider tagged the objects with Akamai serversO Long term contracts ( 1 to 3 years)O Switching is problem for customersO 10 times faster loadingO Cost saving (bandwidth saving for ISPs and hosts)
Network PartnersO Free space from smaller ISPsO 2001: 13000 servers, 63 countries, 95 networks
CompetitionO From caching providers, NSPs, mirroring solutionsO Alliance with sandpiper(another CDN provider)
FreeFlow’s Success
O Akamai enjoyed great success with FreeFlow
O Successful IPO in 1999
O 72% share of $ 125mn CDN market
The Changing EnvironmentFollowing the 2001 bubble burst
• Customer churn rate jumped to 22% from 11%
However existing competitors were worse off
• Content Bridge mired in members squabbles
• Smaller CDN rivals were unable to raise capital
New competitive threat – Backbone operators such as such MCI-Worldcom &
AT&T
• Because of over-capacity started delivering value-added services including content delivery
Fund Shortage at Akamai• Many Companies raised huge sums during the boom preceding the dot-com
bubble burst
• However Akamai couldn’t go for secondary offerings because of SEC’s delay in approval
• Over $500mn cash outlay in Capex and losses in 2001 (In 2000, issued convertible debt of $300mn)
EdgeSuiteIdeaO Based on Federal Express and UPS success,“a
product that would allow them to take over functions that customers thought were strategic”
O Developed a plan that would facilitate assembly, presentation and delivery of customer’s Internet data and applications
Edgesuite - The service created•Employed Edge Side Includes, a mark-up
language•To accelerate the dynamic assembly and
delivery of web- based applications
For example – Airline ticket prices, stock quotes, weather reports
Target CustomersAdvantages over
traditional CDN services
O Traditional customers with content-rich websites
O Enterprise customers that relied on Internet to distribute information and provided Web-based applications
O Better Performance in terms of speed – Atleast double on average
O Origin website cost savings - 2 year return on investment from these savings was > 100%
O Bandwidth savings – Substantial reduction in data transfer
O Scalability – Could handle ‘flash crowds’
O Security – In case of denial-of service attacks
The success early-onO Akamai anticipated Edgesuite customer to spend four
times more than they did on FreeFlow
O Better margins because existing servers installed for
FreeFlow would be used
O Complemented with FreeFlow in terms of data
processing and storage
O Accounted for 20% of revenues in Q4, 2001
O 152 customers – Almost half were new, included
huge corporations like Apple, Coca-Cola, Novartis, etc
EdgeSuite: Implementation StageOpportunity to broaden target market beyond content driven
website to include large enterpriseDecision to be made• Upgrade its own sales force OR• Rely on its resellers that had strong relationships within
the large corporation
Sales Challenge
Enterprise market required new sales skillDealing with corporate IT – Cost center and not a revenue
centerShift from “Nice to have” to “Need to have”First time faced with Consultative sale
EdgeSuite: Implementation StageRoles for Partners
Always relied on partners to resell “FreeFlow” System Integrators Hosting firms Network carriers
Big role of Alliance partners to separate out Business Logic frm Presentation Logic
Business Logic – How data is stored and processed? Presentation Logic – How page components-, outputs of business logic,
are assembled by web servers and routed to users What partners offered??
Technical expertise Skills Relationships in the enterprise market
Akamai did not increase its dependence on resellers
EdgeSuite: Performance through 2003Edgesuite was successful by 2003
Accounted for 60% revenue Customer base increased by 18% Biggest customer – Microsoft – accounted for 20% revenue Demise of CDN – Market share increased by 80% 14,733 servers in 1072 networks across 71 countries
Financials for Q4 2003
Revenue – $45.2 m, up by 28% (Q4 2002) Positive Net Income for the first time CAPEX declined by 6%, Server prices dropped sharply
FY 2004Revenue - $ 187 MOperating Income - $ 31 MEBITDA - $ 54 M
EdgeSuite: Version 3.0Edgesuite – Evolution of CDN into AND
AND Along with functionalities of CDN delivery of Application processing and databases, e.g Online retailing transaction
In 2003
Concept to Commercial service of ADN EdgeComputing customers could run Java Applications build on IBM’s
WebSphere software development tools from Akamai Edge servers
By 2004
Dozen customers running Java applications
Decisions faced Which applications to focus on? Which softwares companies should they team with?
ApplicationsO Requirements
O Sophisticated and influential early adopter
O At least 1000 customers willing to pay thousands of dollars per month
O Eligible applicationsO Dealer locators, Enterprise search, E-
commerce suites, CRM
PartnersO Existing software firms
O IBM (WebSphere), Microsoft (.NET), HP (Adaptive Enterprise), Sun (ONE) etc
O Provided platforms with proprietary features
O Web Services built using other platforms
MicrosoftO Microsoft
O Biggest customerO Decided not to enter the service
businessesO IBM
O Java based WebSphere platformO Largest resellerO Java development in Akamai was
slightly ahead of .NET
AcquisitionsO Netli (Web application accelerator)
O $177 million acquisition in 2007O Increased speed and reliability
O Acerno (Behavioral Advertising Company)O $95 million acquisition in 2008O Basis for ADS (Advertising decision
solutions)O Trying to build ADS as the third major
revenue stream
Performance so farO Revenue grew at 32%O Operating Profit Margin 26% (2009)O 28% of revenue from outside USO Avg webpage complexity doubled
and size tripledO Increasing demand of Online Videos
O Start quicklyO No delays or Rebuffering messages
THANK YOU