Rackspace Expands Cloud Storage Offerings

Rackspace Managed Hosting is expanding its cloud services with acquisitions and new online computing and storage offerings. Perhaps best known for offering hosting servers for other companies, Rackspace plans to expand its portfolio of services with on-demand virtualized servers and more online storage software and capacity offerings.

The company on Wednesday said it is buying Slicehost, which provides hosted virtual servers, and Jungle Disk, which offers online storage, for around $11.5 million. Rackspace's conventional hosting business includes managing more than tens of thousands of servers for businesses in its data centers. The company had an IPO earlier this year and posted net income of $4.2 million on revenues of $130.8 million for its second quarter ending June 30.

Rackspace renamed CloudFS, its online storage service, Cloud Files. It offers online storage starting at 15 cents per gigabyte. Jungle Disk, which provides online storage to businesses and consumers, will become part of the Cloud Files business unit. Jungle Disk now uses Amazon's S3 online storage service to store files for customers and will add Cloud Files to its menu of offerings.

"Rackspace is a natural fit for the next evolution of Jungle Disk," Dave Wright, CEO and founder of Jungle Disk, said in a statement. "We are creating a set of storage solutions that will help solve rapidly-growing storage problems for businesses. We believe that no one could take this solution to the business world better than Rackspace. Together we will push the cloud revolution and make simple and cost effective storage solutions available to businesses of all sizes."

The company also plans to add new service offerings through partnerships. It is working with Limelight Networks Inc. (Nasdaq: LLNW) to offer an online content delivery service and with Sonian Networks to offer hosted email archiving.On the server side, the company renamed The Hosting Cloud, its main online computing service, as Cloud Sites. A new offering called Cloud Servers will be based on Slicehost, which uses Xen-based virtualization technology. Rackspace sees this as a way to provide economical cloud computing power to companies by offering virtualized servers and the ability to add more horsepower when needed. Slicehost offers "slices", or virtual servers, that include computing power, storage, memory, and bandwidth for a monthly fee.

Rackspace CTO John Engates said the Cloud Servers and Cloud Sites offerings may appeal to businesses that are using Rackspace to host their servers but aren't using the full capacity of their machines. Instead, they can just buy the slices of computing power they need, he said.

The three services will become the core offerings of Mosso, the cloud division of Rackspace. The company will be competing with a growing number of online computing and storage services aimed at consumers and businesses offered by Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), EMC Corp. (NYSE: EMC), and others.

"Cloud computing offers tremendous benefits to our customers that complement our traditional managed hosting services," Rackspace CEO Lanham Napier said in a statement. "Being a leader in hosting means being a leader in the cloud. Today, we made clear our intent to have the best suite of cloud offerings. Our new offerings are part of a strategy to bring cloud benefits to all businesses with simple, cost-effective products that everyone can use, backed by the best customer support that only Rackspace can deliver."