Rackspace Deflects Acquisition Rumors, Vows To Remain Partner-Focused

Rackspace has vowed to stay independent and ensure its partners comfort and security amid an acquisition-crazed environment in which cloud and hosting companies are getting scooped up by major telcos and carriers with increased frequency.

Rackspace channel chief Robert Fuller, in a blog post directed toward channel partners that is expected to go live later today, said the merger and acquisition climate in today's cloud market has created an air of uncertainty for solution providers, VARs and MSPs; and solution providers should seek longevity and stability in the partner programs they join. Fuller said he wants partners to know that Rackspace is in it for the long haul and currently has no acquisition plans.

"If you are a channel partner and you are looking to adopt a cloud services model, it's a long-term relationship, not relationship du jour," Fuller said in an interview with CRN.

Fuller said recent acquisitions like Verizon's buyout of cloud provider Terremark for $1.4 billion; Time Warner Cable's $220 million purchase of NaviSite, a cloud hosting provider; and major telco CenturyLink scooping up Savvis, should raise questions for partners over whether these major carriers will continue to rely on the channel or take a direct model, or if their customer engagements will change as a part of the acquisitions.

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The cloud acquisition free-for-all sparked rumors that Rackspace would be the next to go. Rackspace is an attractive target. The 12-year-old San Antonio-based company weathered the economic crisis and lived through a nearly catastrophic IPO in 2008. According to Wall Street estimates, Rackspace has righted the ship as shares hovered at more than $40 per share Wednesday after recently hitting a high of more than $46 per share, which put Rackspace's market cap above $5 billion.

But Fuller said Rackspace intends to remain independent and is not on the acquisition block. He pointed to a recent quote from Rackspace CEO Lanham Napier: "We have not built our company to sell it," Napier said in an interview with Dow Jones Newswires. "We feel like we have a tiger by the tail and have an opportunity to build a Web giant."

Fuller added: "We want to maintain independence. We have been very open in the marketplace as to what our position is."

And for partners, that means the channel will continue to be a driving force in Rackspace's attack on the cloud and hosting markets.

"First and foremost, if you choose to work with a hosting and cloud provider, it's a relationship you're making an investment in, so it's in your best interest for that company to stick around," Fuller wrote in the blog post. "Rackspace is committed to continue delivering the best solutions and offerings to customers and our channel partners."

Next: Rackspace 'Fanatical Support' Is Differentiator

The recent rash of cloud acquisitions by major telcos and service providers should have partners asking several questions, Fuller said. Among them, partners should wonder "if the vendor is going to try and steal my customer" and whether the partner could lose their customer due to inadequate services offered by the provider, Fuller said.

"Another important reason it can be concerning when your cloud provider gets acquired is that their way of business quickly becomes the way of the acquirer," Fuller wrote in the blog post. "If your provider is gobbled up by a company whose approach is to go direct to customers and cut you out of the deal, you may be left in a lurch, providing business to a company that may be compromising the relationship with your customers."

Fuller said Rackspace won't go around partners for direct deals and wants its partners to feel secure and comfortable within its partner program. Rackspace launched a new, streamlined partner program earlier this year that married the four disparate cloud computing, managed hosting, e-mail hosting and Cloud Drive programs.

According to Fuller, Rackspace and its partners will continue to offer what Rackspace has branded as "Fanatical Support," a key differentiator from telcos, cable companies and carriers.

"Just think of the level of support you receive from your current telco or cable provider and ask yourself: Is this what you want your customers to experience with their mission-critical hosted applications?" Fuller wrote.

Overall, Fuller said, Rackspace is looking to "develop partnerships that are enduring" and will go to bat with and for partners for the foreseeable future as an independent company not beholden to the whims of a massive service provider, telco or cable company. He said partners can be confident that Rackspace will stick to its guns and help them build their businesses.

"You always want to evaluate a potential provider the way you'd evaluate a potential employee. So if you aren't confident in a provider's longevity or stability it can negatively impact your business, as well as the customer relationships that drives that business," Fuller wrote. "It isn't worth the gamble, so be sure you pick a provider that's in it for the long haul with you, and one that delivers the best possible experience for your customer."