Akamai Analysts Too Caught Up In Apple’s New Movie Rental Service
All week long I’ve gotten lots of questions about Apple’s new movie download service and what this means to Akamai. There is a lot of speculation out there about Apple’s new service, but now that it has been officially released, I’m not sure why analysts who cover Akamai are so concerned about the impact they think this has on Akamai?
For starters, we all think that Akamai is delivering this content, but I have yet to hear anyone from Akamai confirm this in any public forum. Be that as it may, lets assume Akamai is delivering this content for Apple. What’s the big deal? This is one customer, adding a video offering to the market that is anything but mainstream. Akamai is not going to be delivering so many movies over the next 2 months that it’s going to have any large impact on Akamai’s earnings for Q1. Apple’s new movie service is anything but mainstream and won’t me mainstream anytime soon. For starters, the service has a very limited library and the content only last 24 hours, which is going to turn a lot of people off. You can’t transfer any of the videos to any iPod except for the absolute latest versions, the HD movies are not available expect when rented from an Apple TV device and for all of Apple’s talk about their new MacBook Air, who’s going to rent a movie to play back on that thing when the speakers in the new laptop are only in mono?
Bottom line, the new Apple movie rental service is a start, but it’s not going to revolutionize the video market for movies anytime soon. Widespread adoption won’t happen when you need a device to rent movies and when the amount of time you can watch them for is so limited. The number of Apple TV’s that have been sold is very small and even if Apple sells a few million of them this year, that’s anything but mainstream. Analysts know that the way any company like Akamai grows is by signing up many new customers or upgrading many current customers each quarter. Rarely does one customer have a direct impact on any vendor that results in a big spike in revenue in such a short period of time.
That’s not to say that a new service like this by Apple is not good for Akamai or any CDN in the long run, but it is way too early to tell what real impact it will have on revenue and we won’t be able to judge that impact for many quarters to come.