News Brief

Cloud services provider Rackspace may be exploring a sale. The company has hired Morgan Stanley and Co. to evaluate strategic options, according to Bloomberg News. Its shares rose by seven percent after the report. Rackspace has been a frequent target of takeover speculation. In February, its CEO, Lanham Napier, left the company suddenly.


Rackspace's time as a loner in the cloud business is going to be short.  It is simply too small to stand against the deep pockets of Amazon, Microsoft, Google, and IBM, to name a few.  Rackspace sells in the millions per year, while all the big guys are selling in the billions.

It seems that Rackspace realizes this, because they are hiring a financial firm to find them a buyer.  I am surprised that other large firms haven't made a play for them yet.  Perhaps Rackspace doesn't have enough unique talent  or product to justify a large buyout.  After all, Rackspace is selling Open Source stuff, and other, more well funded firms are doing that, too.  It's success in promoting Open Source may well be its downfall.  Irony is not lost in the age of big iron.


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