IBM-Akamai deal sheds new light on Web hosting business

A recently announced partnership between Akamai and IBM may help enterprises to outsource some Web functions and open up some new opportunities for struggling Web hosting companies.

Akamai, which made its name by providing Web caching services to speed performance and improve availability of corporate Web sites, now is moving into a new business called “virtualized Internet computing capacity.” Under a partnership with IBM, Akamai is now offering a service called Akamai EdgeComputing Powered By WebSphere, which will make it possible for users of IBM’s WebSphere software to offload some of their Web applications functions to the 15,000-server Akamai network.

For example, an enterprise might outsource its Web user registration process, which typically requires heavy server resources, to the Akamai network. This approach could free up significant resources on the enterprise’s Web servers, speeding performance on other functions and reducing the need to purchase additional servers.

As with its other services, Akamai also is positioning the partnership as a way for enterprises to gain additional Web server capacity during periods of peak traffic, such as major Internet promotions. Under the partnership, WebSphere users will be able to offload some functions to the Akamai network on an “on-demand, pay-as-you-go” basis, the companies said.

Akamai and IBM also suggested that enterprises might use the new offering to host Web services applications that are server-intensive. Server capacity is one of the chief concerns slowing enterprises from opening up their Web services applications to a broader range of users or trading partners.

The Akamai-IBM partnership opens up some doors at several industry levels. For enterprises, it paves the way for the outsourcing of specific Web functions or processes – without forcing the enterprise to hand over the entire application to a hosting provider. This means that corporations can make more tactical decisions about how to host a particular Web function, without signing up for a comprehensive, long-term application hosting contract. The enterprise can simply ask Akamai for capacity as needed, and pay for only what it uses.

The deal is also a step forward for IBM’s on-demand computing strategy, which previously focused primarily on enterprise customers. By partnering with a service provider to deliver on-demand capacity, IBM will make it easier for enterprises to take advantage of the technology much more quickly than if IBM had continued to drive the initiative alone.

Finally, the Akamai-IBM partnership could pave the way for a new Web hosting business model – and possibly a resurgence of the hosting business. Until now, one of the knocks against Web hosting was that the monthly service charges were too high to justify the service. But if hosting providers begin to deliver service on a pay-as-you-go basis – with no long contracts or monthly commitments – they may find corporations being much more receptive to using their services. Under the on-demand model, IT department might use hosting services much as a human resources department uses a temporary agency.

Although hardware and software companies such as IBM are increasingly acting as champions for on-demand and utility computing, it will ultimately be service providers and outsourcing companies that deliver those capabilities to the enterprise. With significant server resources already online, these service providers already are in an excellent position to host specific Web functions or Web services applications on an as-needed basis. As the market unfolds, watch for other service providers to enter this space, bringing similar capabilities to Web applications beyond WebSphere.