Post Updated: Akamai Buys Red Swoosh – Making P2P Play?

Akamai announced today that they had purchased Red Swoosh in an all stock deal valued at about $15 million. Red Swoosh is a company that has been around for many years and has a client-side application that enables faster downloads and streams. The company never had much traction in the market and only a few customers probably due to the fact that they are a very small organization and I know had limited resources.

I have never personally used their application and had never heard from any companies who have, but my guess here is that Akamai is using this acquisition to get more insight into the P2P market and potentially use the Red Swoosh client for a new Akamai content distribution service at a reduced price. I like the idea if this enables them to reduce their distribution costs since they are priced much higher in the market that their competitors.

While it is too early to know the role that P2P may play in the content distribution landscape, it’s a smart move by Akamai to get a leg up on the other networks by really immersing themselves with P2P distribution now. With what the multiple that their stock price is trading at, the deal is a no-brainer and there is no downside or risk to it for Akamai.

There is very little mentioned in the press release about the deal and what Akamai’s plan are with it, but I will post more details when I get them.

Update: I sent Akamai a list of questions and just got answers back from them. One interesting thing to note in all of this is that last week, Akamai CEO Paul Sagan discussed P2P technology in a lengthy Forbes article about Sagan and the company.

My main question to Akamai was whether they acquired Red Swoosh purely for the technology or to get a better insight into P2P? As expected, Akamai said they made the acquisition mainly to acquire what they feel is a "unique" client-side technology and they also "benefit from from acquiring Red Swoosh’s skilled software developers that have years of advanced expertise in P2P technologies".

As for what Akamai will do with the technology in terms of offering it as a product and how it will fit into their product portfolio, they said they "are not introducing any product offering at this time, nor discussing any particular time frames."

Clearly, like many delivery networks, Akamai wants to keep a close eye on where a P2P offering may fit into their product portfolio and what type of content is best suited for this kind of distribution. The Red Swoosh acquisition simply allows them to do this overnight by getting the developers and technology in-house from a company that while not successful in selling the service, has been in the P2P market for years and instantly gives Akamai a leg up on the competition when it comes to the networks hands-on knowledge of P2P.