Posted by : Randy Cooper in (CDN)

Akamai: More Aggressive on CDN Pricing, But More Steps Are Needed

Over the last 60 days, I have seen Akamai (AKAM) getting more aggressive with video delivery pricing and in some cases, appears to be doing a better job of trying to keep existing customers at the time of contract renewal. While that should come as no surprise considering current market conditions and Akamai’s recent slowdown in the growth of its business, I think it’s being done too late and on too small of a scale.

While Akamai’s pitch to customers has always been that you should pay more if you want multiple services like content delivery, app acceleration and ecommerce services, for customers who need just video delivery, that sales pitch simply does not work. Yes, if you need content management or other services outside of pushing video bits, I think Akamai has a legitimate sales proposition.

But for customers who need just video delivery, streaming or download and no additional services, Akamai has no justification as to why a customer should pay 3x the going rate. No one can debate with any reasoning that pushing video bits across a network is not already completely commoditized in today’s market.

If Akamai was the only CDN who had the scale or performance to push even commoditized bits across the Internet, then the argument could be made that even if the service is commoditized, Akamai is the only major player in town so it costs more. But that is not the case. The fact that Limelight (LLNW), Level 3 (LVLT) and CDNetworks combined will do more than $200 million dollars this year in CDN revenue proves that point.

Source: http://seekingalpha.com/article/108898-akamai-more-aggressive-on-cdn-pricing-but-more-steps-are-needed

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