Akamai Buys Velocitude - Analyst Blog

Akamai Technologies Inc. (AKAM) recently announced that it has completed the acquisition of Velocitude, a mobile services platform that uses cloud computing. However, terms of the deal were not disclosed.  

The merger is expected to strengthen Akamai’s strategic position in the mobile market. By using Velocitude’s mobile services platform, the company plans to improve the quality of mobile content and applications, and provide superior high definition (HD) video and secure e-commerce to mobile devices. 

According to research firm, eMerketer, the total number of mobile internet users is expected to reach 134 million by 2013 as a result of increasing usage of smartphones. Analysts expect the number of global internet mobile users to increase faster than desktop internet users in the next five years. Moreover mobile commerce is expected to grow to $24 billion by 2015. 

Therefore the acquisition of Velocitude will enable Akamai to benefit from the growing market for cloud computing, HD video and e-commerce to mobile devices. 

Mobile internet users often face difficulties in navigating and viewing websites and applications as compared to desktop internet users, which remains a major drag on the segment’s growth. Most of the companies either use a separate mobile website or provide sub-standard mobile internet services to its customers. 

Akamai plans to solve this problem by offering the new generation of mobile services through the Velocitude platform. By integrating Velocitude into Akamai’s global network, the company expects to offer cloud-based services to customers and design websites optimal for mobile internet users. 

Velocitude’s mobile platform offers a rich and friendly browsing experience to mobile internet users allowing them to perform a variety of services. The acquisition is expected to generate revenue synergies as it enhances customer penetration in the mobile internet segment. 

Akamai faces considerable competition from Level 3 Communications Inc. (LVLT) and Limelight Networks, Inc. (LLNW). 

We have a Neutral recommendation on the stock.
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