As part of their first deal, Akamai will install its Web servers into EarthLink's network. Installing servers on-site helps Internet service providers deliver content, such as Web pages, to customers faster. It also conserves bandwidth costs because the ISP ends up paying less than it would if it had to constantly retrieve content from a data center away from its network.
"For the most part, I would look at the deal as a bigger positive for EarthLink than Akamai," said analyst Brent Bracelin of Pacific Crest Securities. "It should enable EarthLink to lower their bandwidth costs given Akamai can host content on servers that will actually be installed inside EarthLink's network rather than accessing those that reside at a hosting company."
Cost will become more important as EarthLink continues to compete against AOL Time Warner and Microsoft's MSN service, which have 33 million and 7.7 Internet access subscribers, respectively, compared with EarthLink's 4.8 million.
Bracelin adds that the deal is also a boon for Akamai, which is adding EarthLink as a new partner at a time when the market for Internet services continues to prove challenging.
Financial terms of the deal were not disclosed.
Cambridge, Mass.-based Akamai sells software and services to speed Web content delivery by hosting small pieces of Web sites on different machines throughout the world. When a Web surfer wants information hosted on Akamai's network, the content is downloaded from a machine that is physically close to the surfer's computer.