How we transformed Akamai from a CDN to a cloud and security company
The diversification of revenue across new markets through continuous innovation has long been a core part of Akamai’s strategy for long-term profitable revenue growth.
Akamai first made its name with the invention of content delivery services, and we’re still the world's leader in that market today. We stand out for providing the scale and performance required by the world's top brands, as we help them deliver reliable, secure, and near-flawless digital experiences.? Recent examples include delivering the Euros football tournament and the summer games in Paris for top broadcasters around the world.
A little more than a decade ago, we expanded our business into security with the creation of web app firewall as a cloud service.? We did this to meet what we recognized as a growing customer need, in a way that was complementary to what Akamai was already doing for customers with delivery.
The opportunity was clear to us, because we listened to our customers. We created what has proved to be a very successful Cloud Service for Web App Firewall. And, now, for the first time in Akamai history, security delivered the majority of Akamai’s revenue last quarter, operating at an annual run rate of about $2 billion per year.
Security and cloud computing now generate two-thirds of Akamai revenue, whereas delivery provided two-thirds of our revenue as recently as five years ago.
Of course, we’ve greatly expanded our security product set over the years.? We now offer market-leading solutions for DDoS prevention, bot management, account and content protection, app and API security, and zero trust enterprise security led by our Guardicore segmentation solution.
And we’re especially excited about the most recent additions to our security portfolio. Our new Akamai Guardicore Platform is the first of its kind to enable Zero Trust security through a fully integrated combination of micro-segmentation, Zero Trust network access, multi-factor authentication, DNS firewall, and threat hunting. Its single agent and unified control console, powered by genAI, are designed to strengthen and simplify enterprise security with broad visibility and granular controls.? The new genAI interface enables our customers’ operations teams to ask questions in a human language to gain information about their enterprise networks.
The new Akamai Guardicore Platform reflects our evolution as a security vendor – growing beyond point solutions to a broader and more comprehensive security offering. Customers tell us they want to consolidate security products and tools with vendors they can trust, and we think this will appeal to their needs.
Last quarter, we also closed the acquisition of Noname Security, as we accelerate our momentum in the fast-growing API security market. With Noname, we believe that Akamai now has one of the most comprehensive API security solutions in the industry. Within two weeks of the close, Akamai offered Noname customers our new Edge Connector, an integration with Akamai Web App & API Protector.
How we expanded again with a much broader offering
About a decade after we entered the security market, we again expanded Akamai’s future opportunity by assembling a much broader offering in cloud computing.
Akamai has offered FaaS in our edge platform for many years.? This kind of edge computing has been used by thousands of our customers and it is deeply integrated into our delivery and security services.
But our customers asked for more.? They wanted us to offer full-stack cloud computing, so that they could run their VMs and containers on the Akamai platform.? And they wanted us to do it in a way that would be more efficient and less costly than comparable offerings provided by the hyperscalers.
They wanted Akamai to do this, because they were already delivering and securing their sites and apps on our platform. They liked our track record of reliability, and they knew they could trust Akamai to be a good partner. Many of them also like the fact that we don’t compete against them, unlike the hyperscalers.
Adding cloud computing to our portfolio also makes good sense for Akamai.? In addition to satisfying customer demand, we can reap the advantages from offering customers delivery, security and compute on the same platform.? The synergies include:
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If you step back and look at how the marketplace has evolved, you can see how the hyperscalers have worked to achieve a similar suite of offerings, although they’ve taken a different route to get there. They started with cloud computing and IaaS, and then moved into security and delivery, validating our view that there is synergy in offering customers all three together.
The hyperscalers also have a more centralized architecture, while Akamai has the world’s most distributed cloud platform, with more than 4,100 points of presence in more than 700 cities across 130 countries. We believe that being more distributed provides customers with better performance, better economics, and greater reliability.
How we are achieving strong momentum
The initial response from customers to our new cloud offering has been very encouraging.? Our cloud computing portfolio achieved strong early momentum in the first half of the year, and we expect the strong growth to continue.
Customers are also leveraging our ISV partners (which we call Qualified Compute Partners) to run low-latency workloads on our compute platform. These include solutions for observability into workload behavior, cyber security, and large-scale events, where the need to store very large sets of data makes Akamai a more attractive and cost-effective option than competitors.
Our media customers can now take advantage of a full suite of media workflow offerings on Akamai Connected Cloud, which provides valuable synergy with our delivery platform, for more efficient image manipulation, decisioning, and video transcoding. And with Akamai’s latest Qualified Compute Partner and customer, Yospace, media companies around the globe can leverage their advanced ad tech and ad strategies, at scale, across the Akamai Connected Cloud.
Customers are also building new apps on our platform where low-latency data distribution and processing provides a better user experience for their customers at significantly reduced cost. One customer is training and testing the machine learning engines that power their security scanning product. Another is building an AI-powered chatbot application to improve their customer experience and streamline operations with intelligent conversational customer engagement.? Such AI-powered applications are increasingly popular with recent advances in large language models.
Akamai is also a very large user of our new cloud solution.? As a result of migrating most of our own apps from the hyperscalers to Akamai Connected Cloud, we’re seeing better performance and greatly reduced cost.? In fact, we expect to reduce our spending on third-party clouds to less than one-third of what it would have been this year had we stayed on the hyperscalers, saving us well over $100 million in annual operating expenses. It sure feels good not writing a 9-figure check to your competitors every year. And this is a feeling that we look forward to providing to our large enterprise customers.
Looking back, it’s clear that Akamai has undergone a fundamental transformation. We’ve transformed from a content delivery pioneer into the cloud company that powers and protects life online.
Security and cloud computing now generate two-thirds of Akamai revenue, whereas delivery provided two-thirds of our revenue as recently as five years ago.
Akamai has undergone a fundamental transformation. We’ve transformed from a content delivery pioneer into the cloud company that powers and protects life online.
And we’ve achieved this transformation while successfully maintaining robust margins, because both of our fast-growing product areas – our large security portfolio and our rapidly growing cloud computing portfolio – are built upon and enabled by the foundation of our business: our highly efficient and massively distributed delivery platform.
Looking ahead, we’re very excited about our potential for future growth as the cloud company that powers and protects life online – as we continue to expand our security portfolio and as our fast-growing compute offerings continue to gain traction with customers.
Student at Lindsey Wilson College
2 个月Love it
That's quite a transformation. What were some key factors that drove the shift in revenue streams?
PMP?, CISSP?, Senior Security Sales Specialist at Akamai Technologies
3 个月Many facets. One Akamai. That we can solve so many different problems to make customers' business run safer and faster with fewer moving parts is the Akamai difference!