March 13, 2013, 4:00 PM

Akamai sets its sights on revenue of $5 billion by 2020

The content delivery network will add products and clients to get there, it says.

Lead Photo

Tom Leighton, CEO of Akamai

Akamai Technologies Inc., which provides content delivery, web hosting and web performance management services via a global network of servers and technology platforms, plans to grow its annual revenue to $5 billion by 2020, it announced this week during its annual investors summit in Cambridge, MA. Akamai reported revenue of $1.374 billion in 2012, up 19% from $1.159 billion in 2011.

The company expects growth will be driven by increasing worldwide adoption of cloud hosting, or organizations accessing software over the Internet rather than installing and running it in their own data centers. In accordance with that trend, Akamai is developing new products to provide better performance and security over the web, it says.

In October 2012, Akamai released a new product, Aqua Ion, to help clients optimize web page load times on any type of device, including mobile phones and tablets. Last month, it introduced several upgrades to its Kona Site Defender application for protecting web sites and web applications, including a new method of validating traffic to a web site to ensure that it’s not tied to malicious activity, such as a distributed denial of service attack, or DDoS. DDoS attacks typically use compromised computers to send huge amounts of traffic to a web site in an effort to knock it offline.

Whether Akamai hosts software applications for clients or not, many use it to speed up and secure applications hosted by other companies, such as Amazon.com Inc.’s Amazon Web Services, says CEO Tom Leighton. “You make a lot more money if your site is fast,” he says. Akamai speeds web content for clients by storing their content on its network of 127,000 web servers in 81 countries, minimizing the distance web content must travel to the web site visitor.

In order to help scale its content delivery technology to reach ever-more Internet users while also reducing costs for its content-delivery clients, Akamai is building out a platform to bring its software into consumers’ homes via their own web-connected devices, Leighton says. For example, when a consumer begins to download, say, an online game from an Akamai web content delivery client via her game console or TV, Akamai will ask her to install through Akamai’s web connection a small piece of software. If she installs it, Akamai says it can then use her game console or TV connection to forward downloaded content relatively quickly to her neighbors without having to rely on additional web servers.

That translates to cost savings for clients as well as better service for its clients’ customers, Akamai says. For example, when online game publisher burda:ic began using the new platform, Akamai cut its own content delivery costs by 10%, as consumers were delivering 90% of the software to one another, Leighton says. That sped up downloads, which in turn increased the game publisher’s download rates by 20% and helped double its user base, he says.

Akamai’s nascent content-sharing platform already counts 30 million consumer-connected devices worldwide, though for now they all use it to share only gaming software, Leighton says; he expects Akamai will eventually use it to deliver a lot of video. In one Siberian city, 1,936 consumer devices help deliver gaming software to each other, he demonstrated in his presentation at the summit. Akamai does not have servers in that city, so neighborly assists help cut its costs in delivering content there, he says.

For the year ended Dec. 31, 2012, Akamai reported:

  • Net income of $204.0 million, up 1.5% from $200.9 million a year earlier;
  • Performance and security revenue was $584 million, or 42.5% of total revenue, up 22% from $479 million in 2011;
  • Media delivery revenue, including video, was $653 million, or 47.5% of total revenue, up 15% from $568 million in 2011;
  • Service and support revenue was $94 million, or 7% of total revenue, up 6.8% from $88 million in 2011.

Akamai ranks No. 1 among the top 10 content delivery providers in Internet Retailer’s Leading Vendors to the Top 1000 E-Retailers guide. The company also ranks No. 3 for web hosting and No. 9 for web performance management.  The company has 163 clients among the Internet Retailer Top 500 and 20 among the Second 500.

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