As the competition from CDN providers like Limelight Networks (NASDAQ:LLNW), InterNAP Network Services (NASDAQ:INAP) and Level 3 (NASDAQ:LVLT) increases, Akamai (NASDAQ:AKAM) is looking to find new ways to stay ahead. The company has been in talks with telecom operators recently to license CDN technology. [1] We believe there are two motivations behind this move.
Our price estimate for Akamai is $35, implying a premium of over 15% to the market price.
1) Carriers are looking to deploy their own CDNs and Akamai does not want to be left out of the network and would rather license its CDN technology to these carriers that will provide business as well as help telcos build out the capability more quickly.
2) Additionally, it might be a good move to take a lead into this new area before competitors.
Could future be big for licensed CDN business? Please let us know what you think by commenting in the box below.
Notes:
- Akamai Developing A Licensed CDN Offering For Telcos and Carriers, blog.streamingmedia.com, Jun 20 2011 [↩]
