Akamai's Webcast Recap: Stream Buffers, No Real Answers, No New Story

Today, Akamai held their live webcast to talk more about their HD video platform announcement from this morning and worst of all, the actual webcast stream itself didn't work well in Flash. I got lots of buffering, almost never got more than a 398Kbps stream and even though I am on a 25Mbps FiOS line, many times, Akamai's network estimated my bandwidth to be only about 1.2Mbps. Clearly not the impression Akamai was looking to give folks.

Putting the technical issues aside, Akamai's entire webcast failed because they didn't answer any of the questions asked, other than to use a lot of marketing terms. Honestly, I'm disappointed with Akamai on so many fronts. Today, Akamai is still the largest CDN for video delivery based on traffic and revenue, yet they don't act like it. At a time when Akamai needs to be building their CDN business, their revenue is declining and they continue to lose market share. The market has shifted and Akamai refuses to shift and adapt to it.

This is a time when Akamai should be leading the market by telling us where it is going, what the current barriers are to growth and how they are going to go about getting their CDN business growing again. Instead, they spend a lot of time and effort to put out out a release and produce a webcast that gives us lots of marketing fluff. No real details, no real answers, no real vision. I just don't get it. I don't think anyone, including myself, thinks of Akamai as dumb. The folks over there are smart, yet, they seem to have lost all their vision for the CDN industry and their product offering.

While Akamai is a bunch of smart technology folks, it seems no one at Akamai can price, package, productized, market and sell their CDN services anymore. At no time on the webcast did Akamai explain to content owners why they should use the service. They used a lot of generic terms to say why it's great, but nothing that would make a customer switch from one of Akamai's competitors. Customers want real value propositions, not generic statements. Ask yourself, when you think of Akamai's CDN service for video, what message comes to mind? The "edge" story? The number of servers they have? That they are the biggest CDN? Where is their message? It doesn't exist.

The entire webcast was simply a sales pitch for Akamai where they made sure they talked about all of the major buzz words and subjects. They spent five minutes to tell us how their "edge" network is so unique, which is the exact same story they have been talking about for the last ten years. If it's so unique, why is their CDN revenue declining? This is not the year 2000 anymore. Akamai needs a new marketing message and can't keep going back to the old "edge" story time and again. Do they really think that resonates with customers? If it did, then Limelight and Level 3 would not be giving Akamai some serious competition for their CDN business and not because of price. If Akamai's network was so much better for video delivery, then customers would still be willing to pay more for the service. The fact that many aren't willing to is not a reflection of competitors offering lowering pricing, it's that competitors have a service that is equal in performance for video and at a lower price.

While Akamai did take questions from the audience during the webcast, they didn't actually answer any of the questions asked. The first thing they acknowledged was that they know delivering video in HD means more bits and more cost. But instead of talking about their costs to deliver video with the new HTTP platform, which should be cheaper, and how they might help lower that cost for content owners, they chose to answer the question with no specifics. Tom Leighton addressed it by saying, "we've made a large investment in our HD network to minimize the impact of the cost on our customers". What does that mean? Please define "minimize".

Later, when Paul Sagan was asked about pricing, he spent 65 seconds talking about Akamai's history in working with customers, how their pricing today is cheaper than it was ten years ago, how the company has helped their customers scale and threw in phrases about video advertising, quality, broadband models and all sorts of other topics not relevant to the question. Can anyone at Akamai answer a very simple and straight-forward question with a simple and straight-forward answer?

Akamai also talked about video monetization, the growth of broadband, TV sized audiences and just about every other buzz phrase you can think of, yet none of that made any impact on the webcast. Akamai want's to keep talking about broadband adoption and the future, yet I have a 25Mbps connection today and they couldn't deliver me a 1.5Mbps stream successfully. Their CEO made a bunch of references to HD video initiatives by customers for 2010 and "beyond" but that's all Akamai seems to be talking about, the future. What about today? I get the sense that Akamai is sacrificing their business today for what business will look like in the future. Maybe they can do that. They have a lot of cash in the bank and aren't in any risk of going under. But while you want to look to the future, you also have to deal with what's taking place in today's market, something they are not doing.

I just don't understand the company. They have all the tools and advantages over their competitors to really grow their CDN business, even in the down economy, yet they can't seem to get out of their own way. Today alone I spoke to three content owners in regards to Akamai. Two of them contacted Akamai as they wanted pricing for new CDN services, but Akamai didn't respond. Both customers fit nicely into Akamai's sweet spot and spend six figures a year. Both of them commented that Akamai never responded to their requests for a call back and it took one of the content owners contacting someone he know who was friends with someone at Akamai just to get a response. The third customer I spoke to is someone who's contract is up and upon asking for better pricing, was only offered a 7% price reduction, even though Akamai's price is about 85% more than their competitors. And this is a customer spending hundreds of thousands of dollars a year.

When does Akamai make this stop? While do many of us in the industry still continue to hear from potential customers that Akamai does not return calls? How can a sales organization be run this way and be expected to grow revenue? After the clear decline in their CDN revenue, how can calls and emails to their sales team go un-returned? Ask anyone who has sent in an RFP to multiple CDNs and they will tell you Akamai is always the last to respond. Why can't the company make changes to react faster to the market? CDN sales is all about being fast and flexible, something Akamai still has not been able to accomplish.

Honestly, I just don't get it. This company completely baffles me when it's very clear what needs to be done to grow their business, but those steps aren't being taken. I don't get the lack of message coming from the company, the way they sell their services, the pricing they have or the lack of any sense of urgency on their part.

Akamai flat out owned this market at one time, but unfortunately for them, they are losing it when it comes to their CDN business. May not be over night, but we're all seeing the signs of what's taking place and I hope that at some point, Akamai puts a stop to it and takes the necessary steps to fix their CDN business.

Reminder: I have never bought, sold or traded shares in any public company, ever. I have no vested interest in the share price of Akamai or any other content delivery network.

Comments

[gbm]

Dan: Your ranting is a bit long-winded and over the top, but you are right nonetheless. I don't even bother getting quotes from Akamai anymore. They are so overpriced, it's a complete waste of time. Their sales people try to spin it as though you are joining an elite club or something.

[John C]

Dan,

I watched the iPhone demo a week or 2 ago. Same thing there. A bunch of marketing BS. They basically are using the Apple Media Segmenter and an Inlet encoder.

Whooptiedoo... Any CDN that supports an ORIGIN pull would work with that! Also I tried watching their iPhone Live Webcast on my iPhone and it was so choppy and low quality that I couldn't watch it anymore and switched back to my PC. That was me being connected to a WiFi network, not 3G.

It will be fun to watch Akamai crash during the 2010 Olympics. I hope NBC still has Limelight on speed dial so they can cut over when people start complaining about being put in the Waiting Room to watch Hockey! Or the opening ceremonies bring down their network.

Akamai, stick to image delivery!

[Dan Rayburn]

@ John: Nothing Akamai talked about today really has anything to do with the Olympics in 2010. I do not expect Akamai to have any problems delivering the Olympics come next year.

[Had to leave Akamai]

I was with Akamai up until last month. Was spending about $7,500 a month. When my contract was up I asked for better pricing, Akamai would not lower pricing as they said I'm only spending $7,500 a month! Even though the price in the industry had gone down since I first signed the contract. I'm baffled at how Akamai can tell a customer spending $90,000 a year that their business does not matter.

[padmedamo]

I'm not desperate to join the club bashing Akamai quality but I've had a headache recently with the way GTM allegedly works and their cap planning across HTTP/Flash, though moving to HTTP delivery for the latter will help.

More to the point, I understand entirely why your blog and the feedback is negative wrt price. Personally I see that for VOD the level (volume) at which a vertically integrated network provider can deploy own CDN is falling, esp. in terms of sub/asset numbers. Akamai dont appear to have an answer.

[Israel]

Their HTTP streaming is not addressing the key issue, which Dan experience although dan has 25Mbs, akamai determined that it is only 1mbs and deliver ~300Kbs.

It is written clearly in their white paper: if you are more than 100 miles from the source of the video, you CAN'T get HD!!! They are abusing the term HD – they are not delivering HD, period, iPhone maximum resolution is not even close to HD.

The HTTP/ABR at best is ‘nice’ way to go down with bitrate, Frame-rate and resolution hopefully without noticeable buffering but as Dan experience – it is still buffered and this is on an event that was well planned ahead.

One thing akamai is right about: people demand HD, their challenge is to deliver what people really want!!

[Steve Lerner]

Do any vendors, in any IT services field, publish pricing in marketing materials?

[AnotherOne]

Not sure I understand the hang up on price Dan. Akamai has always been a premium offering relative to their competitors; mainly by leading in technical innovation. You say this isn't news but it is - the bigger story is that HTTP is now the protocol for video. Akamai will most likely succeed where Move Networks failed in getting mind share around this concept. Interestingly, Swarmcast is probably most at risk from this announcement... what is their value add now? The "protocol" battle has come to an end.

[GreenField]

Dan,
You raise great concerns, all with valid points. I too had trouble watching on my 100 Mbps LAN. Nothing is more undermining to new revenue than a failed delivery of a webcast about your new product. It came off as if they are a lemonade stand when they are clearly not.

Pricing question - There may be a simple answer if the CEO can't answer the pricing question on a public call when directly asked - he may have not been prepared. Keep in mind this is a new 'product' for Akamai, and for them to come out and give pricing may be foolish especially knowing that all sales engagements are unique to a degree and typically have many factors, etc. I am not defentding Mr Sagan but I would not want my rate card forged into someones mind if it was blurted out on a webcast. It just wouldn't be accurate for every engagement. Nonetheless, someone will have to answer the pricing questions for the market - Dan can you get that and report back in one of your daily updates?.

As for not giving discounts - honestly, the exec team is fooling themselves if they believe they can continue forever with the software-like margins they captured over the past several years. Competitive market pressure is driving margin and customers away, as you clearly point out, they will have to spin sell this one pretty hard to the street and/or buy some of the competition to get/keep market share and shareholder confidence.

It may seem as a radical notion but the question should be asked - is it time that the old guard at Akamai be rotated and replaced with new folks that have fresh up to date market perspectives?

[Old Scheel]

The problem with Akamai is that the company is the "Tom, Paul, Mike, and Bob show" and it is stale. They need new leadership. These guys all want it to be 2000 again and we aren't going back.

[Rob]

I can't see any reason for a CEO to start down a pricing path in the middle of a press announcement unless the announcement is specifically about pricing. At best this would serve as a huge distraction during the call. Paul played it right.

[Inquisitive]

Dan, which of Limelight's press announcements mentions cost savings for the customer? How many can you cite, if any?

For your problem with Adobe Flash during the webcast, check Ryan Lawler's explanation, over at Contentinople, verbatim from Akamai.

When is the last time Limelight Networks posted a profit, other than its one-time gain because the judge reversed her ruling? That is some funny, last-minute way to produce an earnings report that shows a 'profit'!

[Dan Rayburn]

@ Inquisitive: You are missing the entire point. Akamai acknowledged that the first concern with content owners moving to HD is the price, since it takes up so many more bits. Akamai knows this, but didn't answer the pricing question. That has nothing to do with Limelight.

Again, what does Limelight's profit/loss have to do with this topic? Nothing. Trying to deflect the questions I am asking about Akamai by saying their competitor is not profitable makes no sense.

[amavro]

As i had understood the beauty of the HD network is more capacity (existing HTTP servers > flash streaming network servers ), better quality, more features and at a cost of http delivery. What more can you ask ?..

[rad]

The cause is their arrogant culture which is still oriented towards "we invented and own this space". In 2-3 years, when the commoditization of CDN hosting/delivery causes Akamai to start posting quarterly losses, they will be forced to adapt. Don't expect anything but the Status Quo until then.

BTW I spend 6 figures annually with Akamai and they consider my company a "strategic account." Those 2 things do get my phone calls returned fast.

[hayvancilik]

I just don't get it. I don't think anyone, including myself, thinks of Akamai as dumb. The folks over there are smart, yet, they seem to have lost all their vision for the CDN industry and their product offering.