Starbucks deal brings Akamai closer to customers
Cambridge firm will power coffee shops' iTunes downloads
Akamai Technologies Inc. of Cambridge said it had signed a deal yesterday to install server computers in thousands of Starbucks Corp. coffee shops nationwide, in a bid to speed the delivery of music downloads from Apple Inc.'s iTunes Music Store to customers waiting in line for lattes.
It marks the first time Akamai has worked with a bricks-and-mortar retail chain to improve the delivery of Internet-based services to customers in their stores. "With Akamai-enabled servers in our stores, we are able to ensure the highest quality music downloads while providing a very personalized music experience for our customers," said Ken Lombard, the president of Starbucks Entertainment.
The new Akamai service will begin Nov. 8, at about 900 Starbucks stores in New York, Seattle, and San Francisco, and will gradually be expanded to stores throughout the United States.
Akamai and Starbucks declined to reveal financial details of the deal.
Akamai, the leading Internet content delivery company, runs a network of Internet servers spread around the world. These servers store and distribute content from leading Internet sites and online advertisers, speeding up data downloads and reducing the load on individual websites.
Apple already uses Akamai to help manage music downloads from its iTunes store. An iTunes customer in Boston who orders the latest Kanye West album will probably download the music from an Akamai server in the Boston area, rather than from Apple's own site. Kieran Taylor, Akamai's senior director of marketing, said the new system will bring the music even closer to the customers. "The platform is now extending into the actual coffee shops themselves," Taylor said.
In September, Apple announced a deal with Starbucks to launch a new version of its music store tailored for customers at the popular coffee shops. Starbucks stores provide WiFi wireless Internet access for $9.99 a day. But users of Apple's iPhone or people with WiFi-equipped laptop computers and a copy of Apple's iTunes software will be able to log on to Apple's music store for free. Starbucks customers who go to the online store can see the titles of songs playing on the Starbucks audio system and recently played tunes. A "buy now" button lets the user instantly purchase any song for 99 cents.
Under the deal with Akamai, each store's server will contain copies of the songs recently played in the store and other songs popular with Starbucks customers. Taylor said that the music download process normally takes about 30 seconds per song, but will take just two seconds for songs delivered through the Akamai servers.
Mukul Krishna, an analyst at research firm Frost & Sullivan in San Antonio, said Akamai sees the deal with Starbucks as a way to expand into new markets. He said Akamai is facing increased competition from rivals like Limelight Networks Inc. of Tempe, Ariz., which provides content delivery services for Xbox Live, Microsoft Corp.'s popular online gaming network.
"The dominance that Akamai had enjoyed for a number of years is getting challenged quite significantly right now," said Krishna. "It wants to maintain its margins, maintain its revenue stream without getting into any kind of price war." That means selling its content delivery services to nontraditional customers, like retailers.
Akamai's Taylor said the company is looking into a variety of retail opportunities, like delivering merchandise information to Internet kiosks in department stores and shopping malls. "We could have that Web content served locally, to ensure a better user experience," he said.
Apple officials declined to comment about the Akamai announcement.
Hiawatha Bray can be reached at firstname.lastname@example.org.