Akamai falls; Apple reportedly building its own CDN

|About: Akamai Technologies, Inc. (AKAM)|By:, SA News Editor

Dan Rayburn reports Apple, which has heavily relied on Akamai's (AKAM -3.2%) CDN to deliver apps, services, and iTunes content to its customers, is building its own CDN.

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.