E-Commerce Case Study Analysis 1

Akamai Technologies: Attempting to Keep Supply Ahead of Demand In 2015, the amount of Internet traffic generated by YouTube alone is greater than the amount of traffic on the entire Internet in 2000. Because of video streaming and the explosion in mobile devices demanding high-bandwidth applications, Internet traffic has increased over 500% since 2010 and is predicted to nearly triple over the next 5 years (see Figure 3.20). Internet video is now a majority of Internet traffic and will reach 80% by 2019, according to Cisco. Experts call services like YouTube, Netflix, and high definition streaming video "net bombs" because they threaten the effective operation of the Internet. Mobile platform traffic is growing at nearly 70% and will soon push cellular networks and the Internet to their capacities. Cisco estimates that annual global Internet traffic will be around 2 zettabytes in 2019: that's 2,000 exabytes, or, in other words, 20 with 19 zeroes behind it! Analysts differ on how fast Internet capacity is growing. Large telecommunication companies argue that demand will soon overwhelm capacity, while other experts argue that Internet bandwidth can double every year for a very long time and easily keep up with demand. Perhaps they're both right: Internet capacity can expand to keep up with demand if sufficient capital is invested in backbone and local networks. That's a big "if." As a result, and in order to raise revenue, many large ISPs have bandwidth caps that require heavy users of video to pay more for their Internet service. More charges based on usage are in the pipeline. In today's broadband environment, the threshold of patience is very low. Increased video and audio customer expectations are bad news for anyone seeking to use the Web for delivery of high-quality multimedia content and high definition video. Akamai is one of the Web's major helpers, and an overwhelming majority of the Web's top companies use Akamai's services to speed the delivery of content. Akamai serves more than 25 terabits of Web traffic per second. Slow-loading Web pages and Web content sometimes result from poor design, but more often than not, the problem stems from the underlying infrastructure of the Internet. The Internet is a collection of networks that has to pass information from one network to another. Sometimes the handoff is not smooth. Every 1,500-byte packet of information sent over the Internet must be verified by the receiving server and an acknowledgment sent to the sender. This slows down not only the distribution of content such as music, but also slows down interactive requests, such as purchases, that require the client computer to interact with an online shopping cart. Moreover, each packet may go through many different servers on its way to its final destination, multiplying by several orders of magnitude the number of acknowledgments required to move a packet from New York to San Francisco. The Internet today spends much of its time and capacity verifying packets, contributing to a problem called "latency" or delay. For this reason, a single e-mail with a 1-megabyte attached PDF file can create more than 50 megabytes of Internet traffic and data storage on servers, client hard drives, and network backup drives. Akamai Technologies was founded by Tom Leighton, an MIT professor of applied mathematics, and Daniel Lewin, an MIT grad student, with the idea of expediting Internet traffic to overcome these limitations. Lewin's master's thesis was the theoretical starting point for the company. It described storing copies of Web content such as pictures or video clips at many different locations around the Internet so that one could always retrieve a nearby copy, making Web pages load faster. Officially launched in August 1998, Akamai's current products are based on the Akamai Intelligent Platform, a cloud platform made up of over 200,000 servers in 110 countries within over 1,400 networks around the world, and all within a single network hop of 85% of all Internet users. Akamai software on these servers allows the platform to identify and block security threats and provide comprehensive knowledge of network conditions, as well as instant device-level detection and optimization. Akamai's site performance products allow customers to move their Web content closer to end users so a user in New York City, for instance, will be served L.L.Bean pages from the New York Metro area Akamai servers, while users of the L.L.Bean site in San Francisco will be served pages from Akamai servers in San Francisco. Akamai has a wide range of large corporate and government clients: 1 out of every 3 global Fortune 500 companies, the top 30 media and entertainment companies, 97 of the top 100 online U.S. retailers, all branches of the U.S. military, all the top Internet portals, all the major U.S. sports leagues, and so on. In 2015, Akamai delivers between 15% and 30% of all Web traffic, and over 2 trillion daily Internet interactions. Other competitors in the content delivery network (CDN) industry include Limelight Networks, Level 3 Communications, and Mirror Image Internet. Accomplishing this daunting task requires that Akamai monitor the entire Internet, locating potential sluggish areas and devising faster routes for information to travel. Frequently used portions of a client's Web site, or large video or audio files that would be difficult to send to users quickly, are stored on Akamai's servers. When a user requests a song or a video file, his or her request is redirected to an Akamai server nearby and the content served from this local server. Akamai's servers are placed in Tier 1 backbone supplier networks, large ISPs, universities, and other networks. Akamai's software determines which server is optimum for the user and then transmits the "Akamaized" content locally. Web sites that are "Akamaized" can be delivered anywhere from 4 to 10 times as fast as non-Akamaized content. Akamai has developed a number of other business services based on its Internet savvy, including targeted advertising based on user location and zip code, content security, business intelligence, disaster recovery, on-demand bandwidth and computing capacity during spikes in Internet traffic, storage, global traffic management, and streaming services. Akamai also offers a product called Advertising Decision Solutions, which provides companies with intelligence generated by the Internet's most accurate and comprehensive knowledge base of Internet network activity. Akamai's massive server deployment and relationships with networks throughout the world enable optimal collection of geography and bandwidth-sensing information. As a result, Akamai provides a highly accurate knowledge base with worldwide coverage. Customers integrate a simple program into their Web server or application server. This program communicates with the Akamai database to retrieve the very latest information. The Akamai network of servers is constantly mapping the Internet, and at the same time, each company's software is in continual communication with the Akamai network. The result: data is always current. Advertisers can deliver ads based on country, region, city, market area, area code, county, zip code, connection type, and speed. You can see several interesting visualizations of the Internet that log basic real-time Web activity by visiting the Akamai Web site. The shift toward cloud computing and the mobile platform as well as the growing popularity of streaming video have provided Akamai with new growth opportunities. As more businesses and business models are moving to the Web, Akamai has seen its client base continue to grow beyond the most powerful Internet retailers and online content providers. In 2014, Akamai made a push to encourage Hollywood studios to use the cloud for feature films. Akamai announced that it was partnering with Aspera, a high-speed file transfer company, to develop the capability to upload and download large video files fast enough for business use, including feature films. Akamai had already developed partnerships with companies that allow movie studios to convert movie files from one format to another as well as to apply DRM protections all in one step. Establishing partnerships with movie studios represents big business for Akamai, with an increasing amount of media consumption taking place on mobile devices through the cloud. To that end, Akamai acquired video streaming optimization start-up Octoshape in 2015, improving its ability to deliver high quality streaming video. Akamai is also acutely aware of the increase in cybercrime as more traffic migrates to the Internet. Growth in Internet traffic is good news for Akamai, but the company must also now deal with politically motivated cyberattacks, organized crime online, and state-sponsored cyberwarfare. In 2014, Akamai improved its Kona Site Defender tool, which offers a variety of security measures for Akamai clients. The tool protects against Distributed Denial of Service (DDoS) attacks and includes a firewall for Web applications. Akamai also upgraded Site Defender's Web Application Firewall feature and developed modifications to the tool that make it easier for its users to use. Akamai has continued to acquire security companies in 2014, purchasing Prolexic Technologies, a cloud-based security provider specializing in protecting data centers from DDoS attacks. With so many businesses now dependent on the uninterrupted flow of content over the Internet, Akamai is in a very strong position to sell security services to its customers. In 2015, Akamai partnered with top information security firm Trustwave to cross-sell each other's services and products, expanding their offerings and reaching even further. They made a similar agreement with China Unicom, a provider of cloud services in the fast-growing Chinese market. Akamai has also moved into areas of the world with less developed broadband infrastructure, such as the Middle East. In 2015, Akamai opened an office in Dubai, hoping to bolster its presence in an area where the adoption rate for broadband is skyrocketing. However, as impressive as Akamai's operation has become, it may not be nearly enough to cope with the next 5 to 10 years of Internet growth In 2015, the amount of Internet traffic generated by YouTube alone is greater than the amount of traffic on the entire Internet in 2000. Because of video streaming and the explosion in mobile devices demanding high-bandwidth applications, Internet traffic has increased over 500% since 2010 and is predicted to nearly triple over the next 5 years (see Figure 3.20). Internet video is now a majority of Internet traffic and will reach 80% by 2019, according to Cisco. Experts call services like YouTube, Netflix, and high definition streaming video "net bombs" because they threaten the effective operation of the Internet. Mobile platform traffic is growing at nearly 70% and will soon push cellular networks and the Internet to their capacities. Cisco estimates that annual global Internet traffic will be around 2 zettabytes in 2019: that's 2,000 exabytes, or, in other words, 20 with 19 zeroes behind it! Analysts differ on how fast Internet capacity is growing. Large telecommunication companies argue that demand will soon overwhelm capacity, while other experts argue that Internet bandwidth can double every year for a very long time and easily keep up with demand. Perhaps they're both right: Internet capacity can expand to keep up with demand if sufficient capital is invested in backbone and local networks. That's a big "if." As a result, and in order to raise revenue, many large ISPs have bandwidth caps that require heavy users of video to pay more for their Internet service. More charges based on usage are in the pipeline. In today's broadband environment, the threshold of patience is very low. Increased video and audio customer expectations are bad news for anyone seeking to use the Web for delivery of high-quality multimedia content and high definition video. Akamai is one of the Web's major helpers, and an overwhelming majority of the Web's top companies use Akamai's services to speed the delivery of content. Akamai serves more than 25 terabits of Web traffic per second. Slow-loading Web pages and Web content sometimes result from poor design, but more often than not, the problem stems from the underlying infrastructure of the Internet. The Internet is a collection of networks that has to pass information from one network to another. Sometimes the handoff is not smooth. Every 1,500-byte packet of information sent over the Internet must be verified by the receiving server and an acknowledgment sent to the sender. This slows down not only the distribution of content such as music, but also slows down interactive requests, such as purchases, that require the client computer to interact with an online shopping cart. Moreover, each packet may go through many different servers on its way to its final destination, multiplying by several orders of magnitude the number of acknowledgments required to move a packet from New York to San Francisco. The Internet today spends much of its time and capacity verifying packets, contributing to a problem called "latency" or delay. For this reason, a single e-mail with a 1-megabyte attached PDF file can create more than 50 megabytes of Internet traffic and data storage on servers, client hard drives, and network backup drives. Akamai Technologies was founded by Tom Leighton, an MIT professor of applied mathematics, and Daniel Lewin, an MIT grad student, with the idea of expediting Internet traffic to overcome these limitations. Lewin's master's thesis was the theoretical starting point for the company. It described storing copies of Web content such as pictures or video clips at many different locations around the Internet so that one could always retrieve a nearby copy, making Web pages load faster. Officially launched in August 1998, Akamai's current products are based on the Akamai Intelligent Platform, a cloud platform made up of over 200,000 servers in 110 countries within over 1,400 networks around the world, and all within a single network hop of 85% of all Internet users. Akamai software on these servers allows the platform to identify and block security threats and provide comprehensive knowledge of network conditions, as well as instant device-level detection and optimization. Akamai's site performance products allow customers to move their Web content closer to end users so a user in New York City, for instance, will be served L.L.Bean pages from the New York Metro area Akamai servers, while users of the L.L.Bean site in San Francisco will be served pages from Akamai servers in San Francisco. Akamai has a wide range of large corporate and government clients: 1 out of every 3 global Fortune 500 companies, the top 30 media and entertainment companies, 97 of the top 100 online U.S. retailers, all branches of the U.S. military, all the top Internet portals, all the major U.S. sports leagues, and so on. In 2015, Akamai delivers between 15% and 30% of all Web traffic, and over 2 trillion daily Internet interactions. Other competitors in the content delivery network (CDN) industry include Limelight Networks, Level 3 Communications, and Mirror Image Internet. Accomplishing this daunting task requires that Akamai monitor the entire Internet, locating potential sluggish areas and devising faster routes for information to travel. Frequently used portions of a client's Web site, or large video or audio files that would be difficult to send to users quickly, are stored on Akamai's servers. When a user requests a song or a video file, his or her request is redirected to an Akamai server nearby and the content served from this local server. Akamai's servers are placed in Tier 1 backbone supplier networks, large ISPs, universities, and other networks. Akamai's software determines which server is optimum for the user and then transmits the "Akamaized" content locally. Web sites that are "Akamaized" can be delivered anywhere from 4 to 10 times as fast as non-Akamaized content. Akamai has developed a number of other business services based on its Internet savvy, including targeted advertising based on user location and zip code, content security, business intelligence, disaster recovery, on-demand bandwidth and computing capacity during spikes in Internet traffic, storage, global traffic management, and streaming services. Akamai also offers a product called Advertising Decision Solutions, which provides companies with intelligence generated by the Internet's most accurate and comprehensive knowledge base of Internet network activity. Akamai's massive server deployment and relationships with networks throughout the world enable optimal collection of geography and bandwidth-sensing information. As a result, Akamai provides a highly accurate knowledge base with worldwide coverage. Customers integrate a simple program into their Web server or application server. This program communicates with the Akamai database to retrieve the very latest information. The Akamai network of servers is constantly mapping the Internet, and at the same time, each company's software is in continual communication with the Akamai network. The result: data is always current. Advertisers can deliver ads based on country, region, city, market area, area code, county, zip code, connection type, and speed. You can see several interesting visualizations of the Internet that log basic real-time Web activity by visiting the Akamai Web site. The shift toward cloud computing and the mobile platform as well as the growing popularity of streaming video have provided Akamai with new growth opportunities. As more businesses and business models are moving to the Web, Akamai has seen its client base continue to grow beyond the most powerful Internet retailers and online content providers. In 2014, Akamai made a push to encourage Hollywood studios to use the cloud for feature films. Akamai announced that it was partnering with Aspera, a high-speed file transfer company, to develop the capability to upload and download large video files fast enough for business use, including feature films. Akamai had already developed partnerships with companies that allow movie studios to convert movie files from one format to another as well as to apply DRM protections all in one step. Establishing partnerships with movie studios represents big business for Akamai, with an increasing amount of media consumption taking place on mobile devices through the cloud. To that end, Akamai acquired video streaming optimization start-up Octoshape in 2015, improving its ability to deliver high quality streaming video. Akamai is also acutely aware of the increase in cybercrime as more traffic migrates to the Internet. Growth in Internet traffic is good news for Akamai, but the company must also now deal with politically motivated cyberattacks, organized crime online, and state-sponsored cyberwarfare. In 2014, Akamai improved its Kona Site Defender tool, which offers a variety of security measures for Akamai clients. The tool protects against Distributed Denial of Service (DDoS) attacks and includes a firewall for Web applications. Akamai also upgraded Site Defender's Web Application Firewall feature and developed modifications to the tool that make it easier for its users to use. Akamai has continued to acquire security companies in 2014, purchasing Prolexic Technologies, a cloud-based security provider specializing in protecting data centers from DDoS attacks. With so many businesses now dependent on the uninterrupted flow of content over the Internet, Akamai is in a very strong position to sell security services to its customers. In 2015, Akamai partnered with top information security firm Trustwave to cross-sell each other's services and products, expanding their offerings and reaching even further. They made a similar agreement with China Unicom, a provider of cloud services in the fast-growing Chinese market. Akamai has also moved into areas of the world with less developed broadband infrastructure, such as the Middle East. In 2015, Akamai opened an office in Dubai, hoping to bolster its presence in an area where the adoption rate for broadband is skyrocketing. However, as impressive as Akamai's operation has become, it may not be nearly enough to cope with the next 5 to 10 years of Internet growth

1. Why does Akamai need to geographically disperse its servers to deliver its customers' Web content?

2. If you wanted to deliver software content over the Internet, would you sign up for Akamai's service? Why or why not?

3. What advantages does an advertiser derive from using Akamai's service? What kinds of products might benefit from this kind of service?

4. Do you think Internet users should be charged based on the amount of bandwidth they consume, or a tiered plan where users would pay in rough proportion to their usage?