Akamai takes on public cloud giants with $900m Linode deal

CDN and cybersecurity specialist Akamai this week made a grand entrance into the public cloud market.

The company struck a $900 million deal on Tuesday to acquire US-based Linode, an infrastructure-as-a-service (IaaS) provider that pitches itself as a developer-friendly alternative to the likes of Amazon Web Services (AWS), Microsoft Azure, Google Cloud and Alibaba, among others.

“Akamai has been a pioneer in the edge computing business for over 20 years, and today we are excited to begin a new chapter in our evolution by creating a unique cloud platform to build, run and secure applications from the cloud to the edge,” said Akamai CEO Tom Leighton, in a statement. “This is a big win for developers who will now be able to build applications on a platform that delivers unprecedented scale, reach, performance, reliability and security.”

In a similar vein to challenger telcos, Linode’s Website provides side-by-side comparisons between itself and those aforementioned hyperscalers. The one feature Linode appears to consistently offer that those public cloud giants do not, is customer support from a real human at no extra cost. It also proudly points out that it was founded three years before AWS; has presence in 11 global markets including Frankfurt, London, Singapore, Sydney and Tokyo, among others; and boasts more than 1 million customers.

Before anyone gets too carried away though, this deal does not mean Akamai is necessarily going toe-to-toe with AWS and Azure for those huge, global cloud deals with household names. It is more likely it will chip away at the hyperscalers’ share of the SME market. Akamai said the acquisition of Linode is expected to bolster its fiscal 2022 revenue by around $100 million. In its latest financials – which also came out on Tuesday – Akamai reported revenue of $3.46 billion for 2021. The combined entity is by no means a minnow, but when you consider that AWS turned over $17.8 billion in the fourth quarter alone, the gulf in these figures alone illustrates the difference in scale.

Nevertheless, if recent predictions prove accurate, Akamai is getting into public cloud at the right time. As Telecoms.comreported last week, Gartner expects public cloud will account for more than half of global enterprise IT spending by 2025. That represents an almost trillion dollar opportunity.

“We started Linode 19 years ago to make the power of the cloud easier and more accessible. Along the way, we built a cloud computing platform trusted by developers and businesses around the world. Today, those customers face new challenges as cloud services become all-encompassing, including compute, storage, security and delivery from core to edge,” said Christopher Aker, founder and CEO of Linode. “Solving those challenges requires tremendous integration and scale which Akamai and Linode plan to bring together under one roof. This marks an exciting new chapter for Linode and a major step forward for our current and future customers.”

Some of those future customers may include telcos. Akamai also does business with them via its portfolio of cybersecurity and CDN services. With more operators wanting to play the role of a public cloud on-ramp for their corporate clients – as well as migrate their own networks to the cloud – Akamai’s Linode acquisition may represent an opportunity to strengthen those telco partnerships.

As mentioned earlier, Akamai also published its fourth-quarter and full-year report on Tuesday. All the headline figures are heading in the right direction. Revenue for the three months to 31 December was up 7 percent on last year to $905 million. Operating income jumped 46 percent to $196 million, and its operating margin widened six percentage points to 22 percent. Q4 net income increased to $161 million from $113 million a year earlier. On a full-year basis, the picture was broadly similar. That aforementioned turnover of $3.46 billion represents an 8 percent improvement on 2020. Operating income came in at $783.15 million, up from $658.53 million, and net income increased to $651.64 million from $557.05 million.

“Akamai’s outstanding fourth quarter performance capped off an excellent year on both the top and bottom lines,” noted Leighton, in a separate statement.

Indeed, and with the Linode deal expected to close this quarter, and with the dust settling on Akamai’s September acquisition of cybersecurity provider Guardicore, 2022 could prove even more lucrative.