After Apple’s release of the much anticipated Mac OS X Lion yesterday, eager users are now flocking to the Mac App Store to download the software, which is currently available by download only. However, not all users have been fortunate in their attempts. Instead of downloading the software, they were greeted with, “This action cannot be completed at this time.”
To handle simultaneous massive transfers, Apple has partnered with Akamai Technologies Inc., a cloud optimization vendor, which uses DNS and data replication to optimize downloads. Akamai is already popular, especially with game publishers, which heavily depended on Akamai for an increased downloading rate. Earlier this year, Akamai partnered with Riverbed, provider of WAN optimization, to develop a joint application acceleration solution specifically to hybrid clouds.
However, Akamai faced a lot of challenges this year. Aside from close rival Limelight Networks Inc., telecommunications and cables carriers like Verizon, AT&T and Comcast, Akamai has moved into Content Delivery Network (CDN) business. Last month, Akamai shed more than 45% of its market value.
According to Forbes, Akamai has been a dynamic stock. From a high of $54, it fell to $35. Akamai has been losing its leverage of the CDN market with the emergence of competitors that are starting to offer more value. Forbes forecasts that Akamai could raise its average revenue per customer to as much as 10% if they wouldn’t be swayed by the pricing pressure set by competitors. Akamai could fight off pricing pressure by focusing on its value-added services. If competitors would come up with more compelling technology and value-added services, Forbes forecasted a decrease of 15% of Akamai’s average revenue per customer.
Akamai still leads when it comes to CDN technology. Others view that CDN companies would soon turn into a software company, which could change Akamai’s business model dramatically.
Going back to the Apple case, the company will soon roll out iCloud this fall. A reliable CDN would be an integral part in iCloud’s success. Others suggest that it would be better for Apple to purchase or build its own CDN. Whichever the case, this week’s incident begs the question; is Akamai ready for Apple’s cloud?