Akamai Technologies, Inc. (AKAM)

WRa5300745 (< 20) Submitted: 12/14/07 11:31 AM

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Your comment regarding the chip business being a commodity may be accurate, however, most commodities and the companies that produce them have been on a tear for several years because of the voracious appetite of China and India. One only has to look at the gains of tanker companies, oil, copper, aluminum, iron ore, corn, etc. to confirm that a blanket condemnation of commodities is in error.

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Talmar (64.91) Submitted: 12/14/07 7:41 PM

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I'm not sure I understand the meaning of your post, but I believe when you speak of "this...business" you're speaking of the Internet as a whole. Meaning that the dropping price of storage and bandwidth will negatively impact the demand for Akamai's acceleration technology. I don't know where you're getting your "30 cents per GB" figure, but I'll assume you mean storage space. That may well be so, given the way storage prices are constantly falling.



The real bottleneck, however, is the pipeline. The Internet is a vast network that stretches to every corner of the world. It's threaded together by installed lines that allow the transfer of information between one location and another. The problem with installing so many of these lines is that it's costly to replace all of them every 5-10 years when the technology improves. Couple that with the fact that the number of Internet users is still growing, and then invite for dinner the fact that per-user bandwidth demand on the Internet is growing, and have the fact that large corporations want to centralize their data storage and therefore also require more bandwidth bring dessert. You'll begin to see why the price of storage makes little difference in the world of bandwidth. The demand is increasing faster than the supply, and as long as that's the case companies like Akamai will be making money.



If, on the other hand, you're concerned about Akamai decreasing prices for its service, that's part of the price efficiency game. A 66% price drop is a surface fact that doesn't directly correspond to the company's ability to make money, particularly when we're talking about an abstract commodity like information storage and bandwidth with a constantly falling cost of delivery.



This is not an endorsement of Akamai; I haven't done much research into the company and don't know much beyond the basic model. But either way it's intended, this argument just doesn't make any sense.

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claritee (< 20) Submitted: 1/29/08 7:02 PM

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Fool! If this is how you assess your stocks, good luck! This company is about innovative bandwidth, not storage. True, they use storage within their system, and lots of it (it is their intrisic cost which can be leveraged and reduced), but it is not related to their value proposition. Storage, while a building block has little to do with delivery. This company uses patented & proven algorithms to provide reliable delivery for content. Content on the net is growing exponentially, and is broadening (i.e., SaaS). Being the pioneer and leader in this segment, and 800 lb gorilla in mkt share, Akamai brings more to the equation than just the smartest, broadest, most reliable delivery solution. They bring CREDIBILITY. This company reminds me of cisco a decade earlier, who easily met all comers regardless of upstart innovators. Why? Because I.T. won't get fired for choosing cisco, nor will they for choosing AKAM. That, in and of itself is a massive moat. When Telcos and startups tried to enter Cisco's space, true that pricing pressure came, and analyst got concerned about margin squeeze, those entrants inevitably got crushed (JNPR aside) while cisco zoomed right past $100M mktcap.. The same concerns are being voiced now on AKAM. But, the comers are either fleas, or they are Telcos who don't have the focus and expertise to dislodge this giant (same with cisco). Meanwhile the need for content delivery grows and grows, and is not based on growth of Broadband, but rather on growth of content & services. It would take a fool to miss this trend.

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PueoFool (< 20) Submitted: 2/08/08 7:21 PM

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i disagree as price for bandwidth goes down, consumption goes up! Its the perfect supply and demand curve. This company will stick at saturation point but demand for bandwith will increase over the future. Especially with online video rentals starting up!

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electricessence (37.18) Submitted: 2/12/08 2:37 AM

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I completely agree. Akamai's future is too shaky. Other CDNs are doing all they can to undercut them. I wouldn't trust this stock.

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none0such (92.03) Submitted: 5/05/08 11:13 PM

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Even commodities have an historical 15 year boom cycle - this one is just starting.

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