the amazon (AMZN -2.09%) The 800-pound gorilla of the cloud infrastructure market. Amazon Web Services captures about one-third of global spending on cloud infrastructure services and hasn’t lost much ground as rivals grow. AWS has become the standard, default choice for many enterprises, and breaking that stranglehold will be difficult.
That doesn’t mean others aren’t trying. While it will be hard for anyone to out Amazon AWS, Cloudflare (Net 3.85%) And Akame (My brother 0.57%) Two different approaches are being taken to wrest market share from the king of cloud computing.
Cloudflare is best known for securing and speeding up websites, but the company has built a fast, powerful, and easy-to-use developer platform over the past few years. No need to worry about spinning up virtual servers; extracting the right amount of computation, memory and storage; and manage a fleet of infrastructure. CloudFlare handles the hard parts with its serverless platform.
Workers are at the heart of CloudFlare’s developer platform, allowing customers to run code across CloudFlare’s global network, routing requests to the nearest location. As I write this, my latency on the CloudFlare network is 6 milliseconds. If I interact with an application that provides worker benefits, the code will run almost immediately.
A growing array of other products built on workers. For data, CloudFlare offers object storage and a full-featured SQL database solution, along with some other odds and ends. CloudFlare allows for pub/sub event-driven applications, removing the need for a standalone message broker like Kafka. With Cloudflare’s platform, anything is now possible.
The company’s platform is opinionated and doesn’t offer anywhere near the number of products and features as AWS. Sometimes, you really need to spin up a server or run a container, and CloudFlare doesn’t offer the ability to do both. But as the company expands its platform with additional features, so do the workloads that can potentially be run on that platform.
Cloudflare’s developer platform is a great example of the company’s versatility. It already operates a global network of edge servers handling a growing portion of global Internet traffic. Using that network to offer serverless computing solutions to customers makes a lot of sense and has the potential to become a huge business.
Of course, it helps that the company’s overall business is growing. Revenue rose 42% year over year in the fourth quarter and the company is closing in on turning a GAAP profit Beyond serverless computing, CloudFlare has made a big push around zero trust security, a huge long-term opportunity. Overall, the company expects its total addressable market to reach $135 billion in 2024.
CloudFlare isn’t a complete replacement for AWS, but its developer platform is becoming a real competitor to the traditional cloud computing model.
Akamai is best known as a leading content-delivery network provider. With the acquisition of Linode in 2022 and the recent announcement of its connected cloud platform, the company aims to become a cloud giant in its own right.
Linode is like a developer-centric cloud infrastructure platform Digital Ocean. It offers standard fare of virtual servers, containers, storage, managed databases and a handful of other products. Akamai has leveraged Linode’s advantages to create a unique cloud platform by combining the strengths of its own edge network with Linode’s traditional cloud computing model.
Akamai’s plan has three main parts. First, the company is building three new core cloud computing sites, adding to its existing 11 sites. An additional 10 sites are also in the works, and each will be connected to the company’s edge network and offer a full array of cloud services.
Second, Akamai will roll out smaller distributed sites in 50 cities around the world The goal is to offer a subset of cloud computing services in areas missed by larger cloud platforms. These sites are a middle ground between the large core sites and Akamai’s fleet of edge sites that power its content-delivery network.
Third, Akamai will focus its pricing strategy on undercutting AWS and other large cloud platforms in egress bandwidth fees. The company announced in March that it would halve the egress overage fee for its cloud computing services to $0.005 per GB. Comparisons are difficult due to the complex pricing schemes used by AWS, but data transfer costs from AWS to the Internet can in some cases be more than 10 times more expensive than Akamai’s new pricing.
Akamai is betting that its unique approach to the cloud computing market will win over customers looking for something simpler and potentially cheaper than AWS. It may take a few years for the company’s connected cloud efforts to truly pay off, but it’s clear that Akamai’s long-term ambitions go far beyond becoming a content-delivery network market leader.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Timothy Green has a position at DigitalOcean. The Motley Fool has positions in and recommends Amazon.com, Cloudflare, and DigitalOcean Motley Fool has a revealing policy.