Sunday, May 18, 2008

The Akamai in Apple

A week ago Apple has confirmed the secure of another broadcaster on its iTunes Store - the prestigious HBO . I logged in into iTunes Music Store and counted over 60 networks in its TV Shows section - that's a lot! Quite comparable with any cable or satellite operator. And we're talking the big names here, not the noname brands Joost are trying to sell us as the next-generation TV, but the whole alphabet soup of ABC, CBS, NBC and now HBO.
I've heard several times in the past the claim the iTunes Music (and Video) Store is only the means of Apple to sell more iPods and iPhones, but I'm starting to believe now that the opposite is true. I don't think people are encouraged to buy iPods anymore because of the availability of music through iMS. People buy them because they’re cool and have a great UI. Using iTunes is more often than not the necessary evil of having an iPod. Which is exactly how Steve Jobs would like it to be. Being both Apple's CEO and the largest stakeholder of Disney, Jobs has a clear view out his window of the future of the media world. And in that future there's a value chain that begins with the networks and ends at your iPod, and Jobs wants to control both ends of the stick.
Forget about content democratization, long-tail and UGC, according to Jobs the world of the future is the same world of the present minus your cable operator and its primitive box. It's where content is premium, paid-for, globally accessible (or at least where Apple has a retail presence) and is delivered directly to your Apple mobile device.
There's only one piece missing to the puzzle - Apple doesn't really control the distribution of the content. Rather it relies on the services of a content distribution network - Akamai. Akamai had a very unstable year, with its stock jumping up and down ($25.00-$51.00 range over the last year), but it is still the leader in the CDN market. In my view, buying Akamai would make perfect sense for Apple who will gain a full control over the distribution of content. This could complete the transition of Apple from a computers company into a media company.
Here’s a prediction for you.

1 comment:

Anonymous said...

Dude, Jobs is not Disney's largest stock holder, he is the largest one private person stock holder.

Suggesting Apple buys Akamai to gain 100% control of its valuechain is senseless. It's like saying they should buy ConEd because they use a lot of elctriciy, or buy segate cos they buy a lot of disks from them....

THE thing about Internet TV is that the distribution pipe is commoditized and is available anywhere.

When Jobs brought Apple back on track, one of the great things he did was to apply DELL like just-in-time supply chain and minimize inventory risk. It'll bad management on his behalf to assume cost and complexiy of layering the Internet with servers. Or essentially buying a lot of bandwidth stock...

Take care