5G and IoT figure centrally into the acquisition
Cambridge, MA-based Akamai Technologies announced Tuesday plans to acquire Linode, a private-held Infrastructure as a Service (IaaS) provider that goes toe-to-toe with hyperscalers by promising to cut cloud bills in half. Akamai will pay $900 million for privately held Linode, with the transaction expected to close in the first quarter of 2022, subject to customary closing conditions.
The addition of Linode to the mix “is transformational for Akamai,” said Dr. Tom Leighton, the company’s co-founder and CEO.
“Akamai has been a pioneer in the edge computing business for over 20 years, and today we are excited to begin a new chapter in our evolution by creating a unique cloud platform to build, run and secure applications from the cloud to the edge,” said Dr. Leighton.
“By combining Linode’s developer-centric cloud advantages with Akamai’s deep enterprise strengths, we believe that we can provide tremendous value to developers and enterprises as they build cloud applications on Akamai,” said Dr. Leighton in a call with investors after the announcement.
5G and IoT will drive edge computing services – CEO
The company sees enormous potential for edge computing with 5G and IoT, said Dr. Leighton. From his perspective, edge computing is “where more compute services will live as 5G and IoT take hold and expand,” he said.
“With Linode, Akamai will expand beyond security and delivery into the world’s most distributed cloud services provider with leading solutions for security, delivery and compute,” he added.
Christopher Aker, Linode’s founder and CEO, said that businesses face new challenges as cloud services become all-encompassing with compute, storage, security, and content delivery.
“Solving those challenges requires tremendous integration and scale which Akamai and Linode plan to bring together under one roof,” said Aker.
Akamai built its business as a global content delivery network (CDN). It claims its Intelligent Edge Platform is the world’s largest, comprising more than 4,000 global locations in 135 countries. But the company’s edge services revenues have flattened, while its security portfolio’s revenue has been rapidly expanding.
In early 2021 the business reorganized to address the burgeoning enterprise security market. The company realigned into Security Technology and Edge Technology groups. Even before that realignment, Akamai slowly been building capabilities through smaller acquisitions.
Akamai’s secure edge and compute services expand
In late 2020, Akamai bought Asavie, which focuses on security, performance monitoring and access policies for mobile and IoT devices. At the time of the acquisition, Dr. Leighton said the deal will help its carrier partners address enterprise and mid-market customer demand for IoT and mobile device security and management services.
More recently, in October 2021, the compny acquired Guardicore for $600 million. Guardicore specializes in micro-segmentation network security technology, and Akamai said it will incorporate Guardicore into its zero-trust security portfolio. Dr. Leighton said the move would help protect Akamai customers from external threats like ransomware and malware attacks.
Akamai on Tuesday also reported fourth-quarter revenues of $905 million, up 7% year over year (YoY). The company ended the year with total revenue of $3.461 billion, up 8% YoY when adjusted for foreign exchange. Security revenue growth in the fourth quarter was 23% year over year.
Akamai predicts the Linode acquisition will be immediately accretive to its bottom line, expecting a contribution of $100 million to Akamai’s 2022 revenue.
