Buyout ends Akamai, Speedera feud

The news last week that Akamai Technologies had acquired Speedera Networks confirmed two things: The deal will end the companies' bitter rivalry and the content delivery market has matured out of its turbulent adolescence.

The acquisition, still subject to regulatory approval, is aimed at creating a global content delivery network (CDN) powerhouse that can better compete with emerging content and application delivery services from bigger players such as AT&T and Savvis Communications, (which through a series of acquisitions owns CDN firm Digital Island), Akamai executives say. In addition, it puts an end to drawn-out legal squabbling between the two firms since all litigation is stayed as a result of the merger agreement.

"By the standards of business actions, it really makes a lot of sense. ... It's a simple, face-value good deal," says Peter Christy, co-founder of NetsEdge Research Group. "But if you read between the lines, there were a bunch of legal actions that were about to reach some serious event. ... There was a call to action, there was a reason this happened now, otherwise the barrel was going to go over the waterfall."

The acquisition appears to be a good deal for Akamai, which eliminates a primary competitor and gains access to some 350 companies, as well as a presence in India. Speedera last fall opened operations in Bangalore, and has 50 of its 125 employees there, says Ajit Gupta, Speedera's president, CEO and founder.

What the deal means to customers is less clear.

"It's good for [the companies]. It's just simple consolidation. It's less good for us customers in that it takes away a competitive option, reducing our leverage," says an Akamai customer who asked not to be named. "Speedera was an important alternative supplier. But that said, in general Akamai has been a good partner to us, and we'll probably see some benefit from their increased size and scale."

"Whether it's good news in a general sense for the CDN market, that's harder to say and a little more doubtful," says Lydia Leong, principal analyst at Gartner. "It's removing a competitor and turning Akamai into even more of a powerhouse than it has been in the past."