Akamai plans to expand its edge services portfolio through the $900 million acquisition of infrastructure-as-a-service provider Linode. The acquisition, announced this week, marks a new direction for the content delivery network provider.
Linode would add IaaS and security to the edge of Akamai's global content delivery network, which remains a reliable revenue stream for the company. But Akamai wants to spur growth by offering other services, said IDC analyst Ghassan Abdo.
Building seamless edge compute capabilities for cloud applications requires experience, Abdo said. Acquiring Linode allows Akamai to start offering IaaS quickly rather than building from the ground up.
"[The] traditional delivery business is not growing much; it's security that is mushrooming," Abdo said. "This is a move from [Akamai] to transform the business and capitalize on this move towards edge services, edge applications."
Linode, a name derived from combining Linux and node, provides cloud hosting services as an alternative to public cloud giants like AWS, Microsoft Azure and Google Cloud. Linode serves small and midsize companies. Joining Akamai will provide entry into the global enterprise market.
Linode will have a worldwide network to run its cloud-computing infrastructure. Also, the company can offer development tools to deploy and scale cloud-native applications. Akamai does not have general-purpose application development software, but it does offer a security stack at its network edge. Provided services include distributed denial-of-service protection and application, website and API security.
"[Our] customers face new challenges as cloud services become all-encompassing, including compute, storage, security and delivery from core to edge," Linode CEO Christopher Aker said in a statement. "Solving those challenges requires tremendous integration and scale, which Akamai and Linode plan to bring together under one roof."
The acquisition of Linode's IaaS capabilities is unlikely to suddenly make Akamai a key competitor in the public cloud market. However, it will give the company a competitive edge over other content delivery networks such as Cloudflare, Amazon CloudFront, Fastly or Edgecast, Abdo said.
Akamai plans to complete the acquisition by the end of March and make Linode products available through its existing channel partner network. The company expects Linode to add $100 million in revenue over the 2022 fiscal year and provide income tax savings of $120 million over 15 years.
The announcement comes on the heels of Akamai's acquisition of Israeli micro-segmentation company Guardicore, which it completed in October. Akamai is adding Guardicore's technology to its zero-trust network access control portfolio.
Madelaine Millar is a news writer covering network technology at TechTarget. She has previously written about science and technology for MIT's Lincoln Laboratory and the Khoury College of Computer Science, as well as covering community news for Boston Globe Media.