Despite the economic slump, the death of a co-founder in the Sept. 11 terrorist attacks and other impediments, Akamai Technologies executives say their company will continue to evolve into an ambitious provider of edge computing to large businesses.
EdgeSuite, a group of services that essentially offers enterprise customers processing power on demand for specific applications, is making great progress, says Paul Sagan, president of Akamai. Six months after its introduction, 101 customers have bought EdgeSuite.
"Enterprises buy EdgeSuite for the return on their investments," Sagan says. "CIOs [chief information officers] look at what it costs them to run a global, scalable, uniform technology architecture for applications." EdgeSuite allows enterprises to tap into Akamais distributed network of edge servers to integrate mission-critical applications or simply to get needed horsepower to make complex apps run over wide area networks.
EdgeSuite is the beginning of Akamais efforts to reach its goal of becoming the ultimate carrier of business-critical traffic for large enterprises. Sagan says EdgeSuite is tapping into trends such as decentralization of information processing, greater security through distributed reliable architectures, communications over the Internet as an alternative to business travel and cost savings through standardized Web services.
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The move is in line with the original vision for Akamai, which, though known as a content distribution network powerhouse, was always heading in its current direction.
George Conrades, chairman of Akamai, told financial analysts on a recent call that the company is in the process of revamping its internal organization around the vision of "Akamai 2.0," the more advanced implementation of its original business plan. The move is done with a touch of personal sadness, because Danny Lewin, Akamais co-founder and chief technology officer, was a passenger on one of the planes that crashed into the World Trade Center.
A Bigger Idea
"What most people misunderstood is that Akamai is not a CDN company: Akamai is a technology company based on breakthrough math that Tom [Leighton] and Danny [Lewin] developed that let us run probably the worlds largest parallel processing distributed computer," Sagan says. "The first products to sell using this fault-tolerant computer were FreeFlow and FreeFlow Streaming, which were the core of the CDN offering. But the real company is a much bigger idea."
Observers, especially those in the financial community, have had a hard time buying the story in the midst of the downturn, especially because Akamai is not profitable. Its management is making strides at controlling cash burn, including laying off 25 percent of the work force to economize. But in spite of raising revenue and decreasing spending, Akamai is not expected to achieve positive cash flow until 2003. EdgeSuite sales account for only about 10 percent of Akamais total revenue. That, plus the fact that revenue growth coming from new customers buying Akamai services was virtually flat for the first half of 2001, makes some analysts uncomfortable enough to ask if the world needs an Akamai.
"The question now is: Is edge computing necessary?" says Dave Bench, an Arnhold and S. Bleichroeder analyst. "Or is the amount of bandwidth out there sufficient so that you can just throw bandwidth at the problem, rather than servers at the edge of the network?"
But Sagan says those who ask such questions dont understand what Akamais technology does for enterprises. The next generation of products is not about bandwidth, but about processing power and easing integration of software applications across the Internet, Sagan says.
Akamai has struck deals with BEA Systems, IBM and Oracle to ensure that enterprise customers have enough "hooks" in Akamais platform to use it as a medium to interconnect apps with adequate performance guarantees. Akamai started deploying its servers within enterprise networks to facilitate this process.
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