Linode becomes Akamai Connected Cloud
When Akamai announced in February 2022 that it was acquiring Linode, the stock price fell as analysts digested the news. However, it didn’t take long for the market to make sense of the combination and for shares to rebound. There’s logic to pairing Akamai’s content delivery network (CDN) with Linode’s cloud computing services. Adding Linode to Akamai’s CDN offering means that customers can now both build apps and manage content delivery on a single platform. The landscape includes security features too – Akamai has been ramping up on products to improve API security and protect its customers against a range of cyberattacks. But market analysts are a different bunch to Linode’s strong following of independent app developers and small businesses, who appear to be adopting a ‘wait and see’ approach to the merger.
Linode has built a strong reputation as a developer-friendly cloud host, responding promptly to customer queries and providing useful documentation and resources. Many trainee software developers and IT hobbyists got started building their first cloud apps for free thanks to the time-limited credit that came with signing up. But whether an Akamai-badged Linode will nurture up-and-coming talent to the same degree is a question that only time will answer.
An appealing alternative
Certainly, Linode’s independence from so-called hyperscalers – the big names in cloud services such as AWS, Microsoft Azure, and Google Cloud Platform remains an asset. And Linode was up and running long before Amazon’s first large multi-tenant public cloud. But the hyperscalers have sped ahead. AWS and Microsoft Azure are market leaders, with Google Cloud Platform, Alibaba Cloud, and IBM Cloud representing the other big players.
Companies have grown cautious about ending up ‘locked in’ to a cloud vendor – entwined in proprietary products, and at the mercy of price increases. It’s given rise to the notion of alternative cloud providers – companies such as Linode, OVHcloud, Digital Ocean, Rackspace, and Vultr. Today, firms look to pursue a multicloud strategy and build apps that can be run on different vendor platforms, offering some independence. And an Akamai-run Linode will no doubt be hoping for businesses to diversify away from AWS, Microsoft Azure, and Google Cloud Platform in their direction.
Akamai acquired Linode for around $900 million, and has plans to increase the number of data centers. This month, Akamai announced that developers will gain access to three new enterprise-scale core cloud computing sites across the US and Europe, in addition to the 11 existing Linode sites.
At the time of the acquisition, Tom Leighton – Akamai CEO and co-founder – said, “The opportunity to combine Linode’s developer-friendly cloud computing capabilities with Akamai’s market-leading edge platform and security services is transformational for Akamai.” But what about Linode? No doubt competing with the likes of AWS, Microsoft, and other tech giants on a daily basis has the capacity to wear down even the most optimistic and energetic of leadership teams. And teaming up to bolster and expand your services could certainly make life easier if all parties are on the same page.
Investor slide show
Based on the pitch deck shown to investors, Akamai plans to continue selling via Linode’s traditional ‘cloud models’, which includes online trial and purchase. In addition, Akamai will offer the portfolio of Linode products through the company’s ‘globally located enterprise salesforce and robust channel ecosystem’. The strategy adds weight to the idea that Akamai wants to appeal to larger firms who are looking for multicloud. And Akamai will have a readymade contacts book of customers who currently use its CDN services.
Industry analysts have pointed out that Akamai and Linode joining forces means that customers can now potentially run their apps faster – for example, using edge servers sited closer to users. And the merger completes the link from the cloud to the edge. Akamai’s cybersecurity products are another value-add, in experts’ eyes. There’s also the tremendous creativity of Linode’s independent client base to consider. Yes, this could make Akamai a destination for innovative applications. But the question is whether Linode’s core customers will make use of Akamai’s add-ons. Perhaps they just want a ‘no-frills setup’ that just works. And, when it doesn’t, some brilliantly produced resources that help developers to learn from their mistakes.
Just 12 months into the marriage between Akamai and Linode, it’s too early to tell whether the relationship will blossom or sour. Announcing its most recent financial results, Akamai reported compute revenue of $112 million, up more than 60% year-on-year, reflecting the Linode acquisition. And, while Akamai is known for its CDN services, compute and security streams now account for over half of the firm’s total revenue.
As the stock market predicted, the numbers add up. But users might still be unsure about the change.
20 March 2023