Q&A with Akamai CFO: Betting On HD Video For Growth

Q&A with Akamai CFO: Betting On HD Video For Growth (AKAM) - from Silicon Alley insider:

>>Q: How many of the top 25 media companies are 90-95% Akamai customers.

A: A lot of our big guys will dual-source a bit of their content, not as many as you would expect. It tends to be the content where performance matters yet. Our customers use competition to keep us in line. We're certainly the #1 provider of the vast majority of the media companies.

A: We've got penetration of 77 of the top 100 retailers, but when you go down to retailers 101-500 you have some pretty substantial companies, but we haven't reached those guys. That's going to be something you see us invest in. Do it yourself is still the predominant approach for those guys and we can make inroads on that.

Q: As media grow and stays competitive can we expect to see operating margin pressure?

A: Over the last couple years gross margins came down by 6 points, but at the same time our operating margin grew by 10 points because that business scaled. In some sense it's a different business than our application performance business because it's more like a software business. Our solutions and our deals with customers have two elements -- delivery, and there's a software aspect -- how we manage that delivery. When you're talking about a media customer, the delivery aspect is huge. When you're talking about a retailer, there's not much delivery but a tremendous amount of software.