Rayburn states details remain scant about which services and regions will be covered by Apple's CDN, which is still in the build-out stage. However, he does note Apple has hired networking vets who "have a deep background in building out large-scale networks," and that it's "widely known that Apple spent more than $100M with Akamai last year."
Akamai, which posts Q4 results on Wednesday, mentioned on its Q3 CC it's in the midst of price negotiations with a major client that's believed to be Apple. The company has already seen another major client, Netflix, migrate traffic to a home-grown CDN. Both Apple and Netflix have relied on Akamai for relatively low-margin media delivery services.
Rayburn's report is overshadowing a bullish weekend Barron's write-up that calls Akamai "the WD-40 of the Internet," and praised the company's healthy margins, security services potential, and ability to benefit from further Internet traffic growth.
Level 3 (LVLT -1.2%) also provides CDN services to Apple.