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Comcast ( CMCSA ) and Amazon Web Services, part of Amazon.com ( AMZN ), are becoming bigger players in the content delivery network market, posing a challenge to CDN leader Akamai Technologies ( AKAM ), according to Goldman Sachs. CDNs increase the speed of e-commerce transactions, business software downloads and video streaming to mobile devices. “Amazon is growing its Cloudfront CDN to an estimated $1.8 billion in 2016 revenues and shifting its own video delivery from independent CDNs to its own network, and startups like Fastly are growing share,” Goldman Sachs analyst Heather Bellini said in a research report. AWS is part of the e-commerce giant’s fast-growing cloud computing business. Amazon stock surged to an all-time high on Tuesday, as the Wall Street Journal reported that Salesforce.com ( CRM ) was building a new service that uses AWS. AWS was a big reason Amazon reported its highest sales growth in nearly four years when it posted first-quarter earnings on April 28, sending the stock up nearly 10% the following day. Amazon is an IBD Leaderboard stock, with a strong IBD Composite Rating of 95, where 99 is highest. Akamai has a 59 CR. Bellini, who has a sell rating on Akamai stock, attended the 2016 Content Delivery Summit in New York on Monday, gaining views on market trends. “A key takeaway was that the competitive landscape remains intense, as Comcast looks to triple its CDN capacity next year,” wrote Bellini. Comcast, the No. 1 cable TV company, has been expanding commercial services to businesses. Comcast moved into CDN services in late 2014, Bellini noted. One market trend could work in Comcast’s favor, said the Goldman Sachs analyst. “Multi-CDN deployments were a key theme of the conference,” she wrote, “with new startups making it easy to route traffic across multiple CDNs.” Cambridge, Mass.-based Akamai is the No. 1 provider of CDN services. Worries that big customers such as Apple ( AAPL ) and Facebook ( FB ) are shifting more of their data traffic to their own CDNs have pressured Akamai stock. Aside from AWS and Comcast, Akamai competes with Level 3 Communications ( LVLT ), Limelight Networks ( LLNW ), and Verizon Communications ( VZ ), as well as startups Fastly and CloudFlare. Scalper1 News
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