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Akamai’s cloud computing play gains momentum

The company’s compute business could eventually account for the majority of its revenues, surpassing its security and content delivery businesses, says CEO Tom Leighton

Akamai is experiencing strong demand for its cloud computing offerings, driven by customer interest in the company’s cost-efficient infrastructure that delivers faster, more reliable and scalable applications.

Speaking to Computer Weekly during a visit to Singapore, Tom Leighton, co-founder and CEO of Akamai, said compared with compute offerings from global hyperscalers, Akamai’s infrastructure has the advantage of being more distributed.

“We started at the edge, so it’s not a matter of moving there, and we’re very efficient in our distributed platform, so we’re much less expensive,” he said. “In addition, we have market-leading delivery and security capabilities, making us very competitive in the cloud marketplace.”

By the end of the first quarter of 2024, the content delivery network (CDN) pioneer reported over 200 customers spending $36,000 or more in annual recurring revenue for its compute services, with about half spending $100,000 or more, and six spending over $1m per year, all just on compute.

Collectively, these customers are spending over $50m annually, driving Akamai’s cloud computing business in the first quarter of 2024 to grow more than fourfold year-on-year, according to a transcript of the company’s recent earnings call on 9 May 2024.

Akamai’s distributed cloud infrastructure spans three levels that cater to different workload requirements, starting with edge points-of-presence in about 750 cities that are best suited for lightweight applications, such as JavaScript and stateless applications, which can be spun up in milliseconds wherever required.

Then, there are core sites designed for running monolithic applications with large data stores, followed by Gecko, a new edge compute service that addresses stateful but light workloads that don’t require massive storage. Gecko supports virtual machines and containers that deliver services closer to users.

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Leighton added: “In Southeast Asia, you’d want that support in countries that don’t have a hyperscaler or a core datacentre, but now you can have cloud computing there. So, it’s sort of hierarchical, depending on the application, the need for closeness to the end-user and how heavy the workload is.”

He said demand for Akamai’s compute services stems from its existing customer base, including technology and financial companies, as well as e-commerce and media firms that require low-latency performance.

For example, media and entertainment giant Sony, which has multiple latency-sensitive compute workloads, is using Akamai’s edge compute service to improve search engine optimisation for PlayStation.com and other use cases.

Akamai has also partnered with an observability provider to secure cloud computing deals with one of the world’s leading gaming companies, a leading luxury goods brand in Europe and one of India’s largest conglomerates.

Leighton said that with the enormous cloud computing market, Akamai’s compute business could eventually account for the majority of its revenues, surpassing its security and content delivery businesses, which are the top two revenue contributors today.

Akamai made its foray into cloud computing in early 2023, following its $900m acquisition of Linode, an infrastructure-as-a-service provider. “Linode is very popular with developers and has a very good reputation,” Leighton said. “A lot of executives I talked to in this region who’ve used Linode like it, so it’s good that they have a positive impression of our compute platform.”

With a strong start for Akamai’s compute offerings in 2024, the company expects compute revenue growth to be about 21% to 23% in constant currency for the full year.

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