RapidScale Acquires Vonage's Hosted Infra Business For Expanded Desktop-As-A-Service Portfolio

Channel-friendly cloud service provider RapidScale will be taking over VoIP service provider Vonage's hosted infrastructure services business. Vonage announced the transaction earlier this week on its earnings conference call.

RapidScale will own Vonage's infrastructure as a service, hosted Exchange, virtual desktop, hosted Lync, hosted firewall, Microsoft Skype for Business, and its IT services units, according to RapidScale.

The Irvine, Calif.-based cloud service provider, which does business exclusively through channel partners, is acquiring Vonage's hosted infrastructure services as a way to grow its footprint on the East Coast, while giving Vonage business customers access to managed cloud services – RapidScale's specialty, Randy Jeter, CEO of RapidScale, told CRN on Friday.

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The partnership will also give RapidScale partners access to another desktop-as-a-service [DaaS] model – VMware's Horizon. RapidScale today offers Citrix DaaS in a fully-managed environment.

"Partners want what the customers want," Jeter said. "In order to be the true leader in DaaS, we have to acquire a company that gives us that skillset, or build it in-house, so we are acquiring it."

After being migrated to RapidScale's platform, more than 175 Vonage business customers will have access to RapidScale's self-service portal. Using the portal, customers can create new users and servers, and can spin up desktops instantly, according to the cloud provider. Users can also continuously manage their environments and easily handle password resets, monitoring, and view usage reports.

The hosted infrastructure services business wasn't material for Vonage, which has a $1.45 billion market capitalization. "This portion of our business is small and sub-scale, generating $6.3 million of revenue in 2016," a Vonage spokesperson wrote to CRN in an email response to questions.

"Vonage wants to expand way beyond the consumer product set – they are doing more advanced applications and this divestiture allows them to be stronger in the UCaaS and CPaaS space, and they needed to have a partner could take care of their [desktop as a service] customers," Jeter said.

Holmdel, N.J.-based Vonage has spent the last two years buying more business customers and capabilities by way of acquiring smaller competitors. The provider bought Simple Signal in April 2015 and it continued that enterprise customer appetite by snapping up iCore in August 2015.

In June 2016, Vonage paid $230 million in cash and stock for Nexmo, a Twilio competitor that provided communications APIs so companies could integrate various forms of communications, like voice and chat, into their own applications.

The business that Vonage is offloading to RapidScale mainly came from Vonage's iCore acquisition, Jeter said.

A spokesperson for Vonage told CRN "after operating this business for the last year and a half, determined it is not core to our strategy of becoming the differentiated leader in business cloud communications."

Vonage's 10 hosted infrastructure business employees will become RapidScale employees after the acquisition closes, Jeter said.

The acquisition is slated to close on May 31, 2017, according to Rapidscale. Terms of the agreement are not being disclosed.