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Cas e S, u d 187 . dis CASE STUDY rnob l1Pe has a AI<amai Tech n 0 o 9 es . . S rn The Web's Jukebox licati es to :\11 M ost people love the Web. but hate the wait. Studie s h.r, e s how n that most .eVitab. won 't stay on a Web site if the Web page and its co nte nts tak e more than , all B a few seconds to load, Other st udies show th at i . a vi deo ad o r sports Intern video take s too long to buffer. shows Jerky fram es, or poor visua l q uali rx ideo CQ over half the c ustomers will seek out a competitor 's Web site. Fur online pu bli she rs .nd Inte. and ma rkete rs, on line video is rapidly becoming a se rious com po nen t or t heir .e mobil b usiness strategies , In order for these initiatives to pay off, the viewing e xperience at ions i needs to be near ly flawless . For marketers who in cr ea sin gl y ar c usin g vi deo to estab lish a more intima te relationship with the consu mer and the brand, the qu alit v of the Interne t video experien ce is cri tical. In today's broadband cable and DSL e n viro n m e nt, the thresho ld of pat ie nce i-, probably much lower than a few seconds , In cr ea sed vi deo and audio customer expel - tations are bad news for anyon se eking to use th e Web for de hvc ry of high -qualitv mult imedia content s uch as CD qualit y mu sic and high de finition video. If you an' SIRlUS /XM Radio and you want to stream online musi c to a several millio n users c' SOlUlIO"S rf {: n;OlOl, r °IAltamai is; the thread in (he fabric of the tnternet that you don 't see until it'sro t there.· - " Ao ....rn •• T_ dlnolo9'.S· '0(1,11 0 ,. ",,u to rn•• '. <Yle. IS d. ,.. ty ". "" n•• u.&r,,-o t ·th. · .rt N.t..,., .. Op . , . bOns ...--fto ..... _ Coll ....... .&M loc . h od '" ': bMq•. ""u<...ch", • • n:•. ..,. • .. .Iok.m.. IIOCC .n.bl". pro.aw onrto .. n'll .nd troll",bl •• koo"nq _-.."odN 1il.. 0' .11 a, rs .n '-h"1k1b ... A.k.&n\•• n. ,.o,k . In . dditron. oil'" I'IQCC "'" 'too" d.. ltr" ·1 b.n .,. of l:h. ' ... ·t 'm. oIIf <:h. Intern.t. Th. HOCC , p rtn .. n . n c. M'ld ..-"1 "1<"", .. , l. s l 'eIO<lnl., to ".h.O.1< co n d . to<ln s - .,n. bhnq .:o l<..,n•• to .... .......... s_ nd'> tn"d'. .nd .001.u,bon•. '"q .. ,dl." ?t ... t" o , k ... ... tI"'1rf.c .ofurne . n.. HQC C 'I ze .. d... . '7 d'l .". ,. • • • l< . "lle ft n. r...o.... Oller. llons o"" onn.l - . -, :.-".' .,,-'. " ::." .' .. . .... '.
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Page 1: CASE STUDY e s - College of Business Administration for... · CASE STUDY . rnob . l1Pe . has a . AI

Cas e S , u d ~ 187

.dis CASE STUDY rnob

l1Pe has a AI<amai Tech n 0 o 9 e s ..

Srn The Web's Jukebox licati

es to

:\11

M ost people love the Web. but hate the wait. Studies h.r, e shown tha t most

.eVitab. won 't stay on a Web site if the Web page and its conte nts tak e more than , all B a few seconds to load, Othe r st udies show th at i . a video ad o r s po rts

Intern vide o take s too long to b uffer. shows Jerky fram es, or poo r visua l q uali rx ideo CQ over hal f the customers will seek out a competitor's Web site . Fur online pu bli she rs .nd Inte. and ma rkete rs, online video is rapidly becoming a se rio us com po nen t or their .e mobil b usiness strategies , In order for these in itia tives to pay off, the viewi ng experience at ions i needs to be nearly flawless . For marketers who in crea singly ar c using video to

establish a more intimate relationship with the consumer and the brand, the qualit v

of the Interne t video experience is cri tical.

In today's broadband cable and DSL en viro n ment, the thresho ld of pat ie nce i-,

probably much lower tha n a few seconds, Increa sed video a nd audio customer expel ­

tations are bad news for anyon se eking to use th e Web for de hvc ry of high-qualitv

multimedia content such as CD quality music and high de fi nition video . If you an'

SIRlUS/XM Radio and you want to stream online music to a several millio n users c'

_l"~

~ lo.....--,~._;;x<:;;;:I

SOlUlIO"S rf {: n;OlOl, r

°IAltamai is; the thread in (he fabric of the tnternet that you don't see until it'sro t there.·

- " Ao....rn•• T_ dlnolo9'.S· '0(1,11 0 ,. ",,u to rn•• ' . <Yle. IS d. ,.. ty ';.rnon st.r.~.d ". "" n•• u.&r,,-o t·th.· .rt N.t..,., .. Op . , . bOns...--fto ..... _ Coll ....... .&M ':.n~r. loc . h od '" ': bMq• . ""u<...ch", • • n:•. ..,. •

..J.....-..~.~ .Iok.m .. IIOCC .n.bl". pro.aw onrto .. n'll .nd troll",bl•• ko o"nq

_-.."odN 1il.. 0' .11 a, rs .n '-h" 1k1b ... A.k.&n\•• n.,.o,k . In . dditron. oil'" I'IQCC "'" 'too" d.. ltr" ·1 b.n ~ •.,. o f l:h. ' ...·t 'm. cond~o n oIIf <:h.~:taM6 nJ1:u c:~~~ Intern.t. Th. HOCC , p rtn .. n . n c. M'ld ..-"1 "1<"", ..

C '-d:K'l ~~;;:i..-, _ , l. s l 'eIO<lnl., to ".h.O.1< co n d.to<ln s - .,n.bhnq .:ol<..,n•• to ....t .......... s_ o.l.~ nd'> tn"d'. ( <lntAn~ .nd .001.u,bon•. '"q .. ,dl." ?t ...t" o , k

.,.~~:~ "­

~·~...~...~ tI"'1rf.c .ofurne . n.. HQC C 'I I ~. if ed ze hou. ~ .. d.... '7 d'l .". ,. • • • l< b~ . "lle ft n. r...o .... Oller. llons o"" onn.l

-

. -,

.~. :.-".' .,,-'. "~.Ji~~~~: " ::." .' ";"~"~:-"~;~~~£".. ~. . ....

'.

Page 2: CASE STUDY e s - College of Business Administration for... · CASE STUDY . rnob . l1Pe . has a . AI

188 T h e Int ern e t and Wor l d Wi d e l ebCHAPTER 3

day , yo u will defi n ite ly need some hel p. If ')ou are i\IT \ ,1I1J \\ " ~l

video to you r 6 million customers online, U I -vpplr- iTun cs ., Ll Ie

m us ic or video fiJes to yo ur 10 m illion o nline .ustomers, ::- (HI' .

h elp . Akarnai is o ne of th e Web 's major he lpe rs, and each ot the pi '" l '\

alo ng w ith 2,000 othe r o n line firms, use Akarnai's services to ~r'" I

conten t.

Slow-load ing Web pages and web content-from musi rv .« i,

results from poor design, bu t mo re oft e n tha n not , the p ro lern s ,'1 -r.

lying infrastructure of the In terne t. As you have lea rned in this I inn r l

was originally developed to carry text-based e-mail m essages a rnong ,r .. I

group of researchers, not bandwidth -h ogg ing graphics , sound , .md '. lei" I ( n,

of mill ions of people a ll at once . The Int e rn e t is a collec tio n ot IH'tWI1!

pass information from one network to anot her. Someti mes the h.mdo tr fll I " "th 1

Every I ,SaO-by te packet of information se nt over the Internet must h, 11'1" ( 1-],

re ce iv ing server and an acknowledgment se n t to the sende r. This st,)\\ Sell)' 1 '11:. he distribution of content such as music, but also s lows do wn mur II' r, I

such as purchases, that requi re th e client co m pu te r to in ,'UI r ' \ 1 I If't

shopping cart. Moreover, each packet may go thro ugh many J itt<' n 1 ~, lIS

wa y to its fin al destination, multiplyi ng by several orders or ma gn u ud- 'I1 "

acknowledgments required to move a packet from New York to Clan tl" I. ( [ f·

Internet today spends much of its time and ca pac ity ve rify ing pa' h, ( ' , I

a problem ca lled "latency" or del ay .

Today 's Internet traffic has also changed drastically Insuao ,', 1 I . \.

messages, today 's Internet must devote 33 Q6 of its tot al ca pacitv (0 m..- :

and o the r P2P network m isic! Mu sic lovers do minate (he \\ 'f'h' s 11'1 I ( (

there are over 500 ,000 vis ito rs pe r m inute to C .S. music si tes.. r o.h. I' r I"

ity is devoted to video sites that spew ou t everyth ing from full-l- ngul ,," , I' ,tI· l

e rs to short marketing videos . Vide o traffic will increase to mort t h.m () 1'1

capacity by 2010. The explosion in user- ge ne ra ted content s ite s, stre.in ' I I ' I' '~

music, movies, games, and Big-Ban d a ppl icat ions like h igh detiru n. m t( I, "\ '>' 11

Video, all point to a po tential crisis for the Interne t , leadi ng to de l.rv-, ·\I'd h' d II "

Akarnai, and other firms in the CON (co n tent d is tribu tion networks i i.ulus r: II" I'L'

of the reasons why the Web ha s not disintegr at ed under the lo.id

There are many other causes of Internet del ay or fa ilu re , mr luum , lIlel '(~ ' I

constraints a t the end-user s ite , Interne t traffic exceeding the l , l p d' it., ,

local ISPs , malfunctioning peering po in ts a t the and-off of dat.i b, t ,\ 1', nd

traffic bottlenecks at corporate da ta cente rs. The result IS th a t. P .l I I~

without sp ecial e fforts , th e av erage through pu t on a busy d'l) tru n <, 1 I

New York is about 30 Kbps- enou gh for text e- mail but no t UlOlI ~ t1 I I I I" \

id eos or music downloads . The sol ution Akamai ca m e up \\ it n ~ l

it places copies of co nte n t clo se to the use r so the corire nt o nl v h, s 1 l' I S

country once and ca n be delivered to u se rs from local server s .

Akarnai (wh ich means intellige nt, cleve r, or 'cool" in Hawa ua n TI'L.' -s

founded by Tom Lei ghton, an l [IT professo r of app lied rnat he mau .

Lewin, a n MIT g rad student. with the idea of expediting lnte rne r IrJ~ "

Page 3: CASE STUDY e s - College of Business Administration for... · CASE STUDY . rnob . l1Pe . has a . AI

C a : eS t u d y 189

these limitations. When Timothy Berners-Lee, founder of the World Wide Web,

realized that congestion on the Internet was becoming an enormous problem, he issued a ch alle nge to Leighton's research group to invent a better way to deliver Internet content. The result was a set of breakthrough algorithms that became the basis for Akamai . Lewin received his masters degree in electrical engineering and computer science in 1998. His 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 Augus t 1998, Akarnai's main product is EdgeSuite, a suite

of services that allows corporations to maximize their Web performance and minimize costs while distribu ting their content on the In ternet. EdgeSuite allows customers to

move their Web content closer to end users so a use r in New York City, for instance, will be served L.L.Bean pages from the New York Metro area Akamai ser ers, while

users of the L.L.Bean site in San Francisco will be served pages from Akamai servers in San Francisco. Presto! Faster Intern et. Akamai has a wide range oflarge corporate and government clien ts, from SIRIUS/Xlv'! Radio, App le iTunes, and Yahoo to NAS­

DAQ General Motors, and FedEx. Today, Akamai has nearly 2,000 corporate and gov­ernment customers and operates over 20,000 ser -ers worldwide, which makes it possible for customers' Web pages and other content to load and run quickly. In 2007,

Akamai accounts for about 20% of all Intern et content distribution in the United States. Other competitors in this space are BlueCoat, LimeLight, SAVVIS, and Mirror Image Internet .

Accomplishing this seemingly simple task-what Akamai calls "edge computing"­

requires that Akamai m on itor 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 au dio files that would be difficult to end to users quickly, are stored on Akarnai's 20,000 servers on 1,100 networks located in 70 countries around

the world. When a user requests a song or a video file, his or her request is redirected to an Akamai server nearby and the conten t served from this local server. Akamai's servers are placed in Ti er 1 backbone su pplier networks, large ISPs, universities, and other networks. Akamai's software determines which server is optimum for the user

and th en transmits the "Akarnaized" content locally. Web sites that are "Akamaized" can be delivered anywhere from four to ten times as fast as no n-Akamaized content.

Akamai has developed a n umber of other business services based on its Internet savvy, including con tent targeting of adverti sing based on use r location and zip code,

content security, business in telligence, disaster recovery, on-demand bandwidth, and computing capacity during spikes in Internet traffic in partnership with IBM, storage, global traffic management, and st reaming services.

For marketing and adverti sing firms, Akarnai offers a product called EdgeScape. EdgeScape provides enterprises with in telligence generated by the Internet's most

accurate and comprehensive knowledge base of In ternet network activity. Akamai's

mass ive server deployment and relationsh ips with networks throughout the world enable optimal collection of geography and bandwidth-sensing information. s a result of these unp aralleled data-gathering techniques, Akamai provides a highly accurate

Page 4: CASE STUDY e s - College of Business Administration for... · CASE STUDY . rnob . l1Pe . has a . AI

I� I

190 C H A P TE R 3 The I n t e r n e t and Wo rl d W id e W eb

-SOU RCES: "Video Surge Divides Web Watchers," byKevin Delaney and BobbyWhite, Wall Street Journal, August 14, 2007; "Akarnai, ExxonSlide, WhileApple Shines," byThomas Gryta, Wail SneerJournal, July 27, 2007; Akamai Technologies Inc. 10·K for Ihefiscal year ended December 31, 2006, filedwith theSecurities and Exchange Commission on March 30, 2007; "A Star isReborn, ' Business 20, July 2005.

knowledge base with worldwide coverage . Customers integrat e a sirnph pi' ' ..': { 1" I I

their Web se rver or application se rver; This program co m municates \,\'1' r th, \

database to re trieve th e very la test information . T he Aka rna i global nrr work Il '"

is con s tantly mapping the Inter net , and at the same tim e, each enu-r p ris- 's I:.d~1 ", I'

software is in continual com m unicati on with th e Akarri ai net work. I he- "I '~ul d I'

always curren t. Adverti sers ca n deliver ads based on count ry , region , I,it\ , m,n kt' d ­

area code, county, zip code , con nection type, and speed. You can set' $('\1: 1',11 111 , I .~

ing isua lizations of th e Int ernet wh ich log ba sic real-time Web ac tiv itv h\ '. i"lt ;I,' It"

Akarnai Web sit e an d clicking on "View Visualizations "

While Akarna i is o ne of th e leade rs in its fie ld. th e burst of the In te rnet IJL.I,I.

2001 and 2002 deepl y impacted its corpo rate and stock performance, v\ hi'" \k.\ I

went public in 1999, its stock soa red to $345 a sh are. In 2007, its stock tr.ides 'I .11, ,if)

range despite a huge growth of nea rly 60 % in rev enues over :2006 res ults \ p.lr' "

exp la na tion fo r th is poor sto ck perfor m ance is competition from l)t~,,,, l . IIII

deli ve ry net works , wh ich ha s lowered pr ices for content del ive rv se n It ,>, 1,\<1

reduced Aka mai 's profi t margins. The costs of maintain ing a tech nolozi.al I'lh.t ,r

Akarna i's networ ks are extre mely h igh .

Case Study Questions

1,� Why does Akamai need to geograph ically disperse its servers to del iver its customers ' Web content?

2.� If you wanted to deliver software content over the Interne , wouldyou sigr r forAkamai 's service) Why or why n t?

3,� What advantages does an advertiser derive from using Akamai's EdgeScape service) What kinds of products might benefit from this kind of service)

4, Wit the demand for high-bandwidth musi c and video exploding, why Isn't Akamai's stock performing better) If you were an invest r, what factors WOUld

encourage you to invest inAkarnai? What factors would discourage you I

III REVIEW� ]

I{EY CONCEPTS

•� Di scuss the origins of the Internet.

The Internet has evolved from a co llection of mainframe co m pu te rs 1 ' )I~ dtt~ d I

few U.S, college ca mpuses to an in te rcon nected ne twork of thousa nds ot 11 L't '.\" IJ I

and millions of comp uters worldwide. T he h istory of the Interne t CJn he divid. •I into three phases :