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Rackspace Shakes Up Managed Services with Datapipe Acquisition

In a move that combines two major providers of managed hosting and cloud services, Rackspace this week announced it is acquiring rival Datapipe in its biggest acquisition to date.

San Antonio, Texas-based Rackspace has 12 datacenters worldwide, while Jersey City, N.J.-based Datapipe runs 29. Combined, the two companies will become the largest managed hosting and cloud services provider worldwide, according to Rackspace CEO Joe Eazor.

"It will have a big impact on our ability to deliver the multi-cloud services that today's customers are demanding," Eazor said in a blog post on Monday. "They want us to give them expert, unbiased advice, and manage their applications on whichever clouds will best meet their unique needs. They want us to serve them at scale, from data centers and offices across the globe. And they want the world's best customer experience, across digital tools and results-obsessed customer service. Our mission is to meet those needs -- today and as they evolve."

Both companies are privately held and offer managed public and multicloud services that collectively include the Alibaba Cloud, Amazon Web Services (AWS), Google Cloud Platform (GCP) and Microsoft Azure.

The companies also have distinct services. Datapipe customers will be able to benefit from Rackspace's Google-based services. In addition, Rackspace, which was a key creator of OpenStack before contributing it to the open source community, offers managed OpenStack services.

Rackspace also offers VMware-hosted services and, though its Microsoft partnership, managed Exchange, SharePoint and Windows Server hosting. It also provides Office 365 and Google at Work services, as well as managed Oracle and SAP services.

Datapipe will boost the Rackspace portfolio in several ways, too. It has a strong public sector business with customers like the U.S. Departments of Defense, Energy and Treasury, and has FedRAMP and FISMA certifications. It also services agencies outside the United States, including the United Kingdom's Cabinet Office, Ministry of Justice and the Department of Transport.

In addition, Datapipe offers Alibaba Cloud integration, giving Rackspace a foothold in China. It also extends Rackspace's presence in other regions where it was previously limited, including the U.S. West Coast, Brazil and Russia.

Datapipe also brings added managed public cloud migration services, colocation services covering four continents, and experience bringing cloud services to midsize organizations and large enterprises.

The agreement is indeed a reversal of fortunes for Rackspace, which had struggled to grow a few years ago and had put itself up for sale in 2014. After failing to forge an acceptable deal, Rackspace decided to go it alone, and added public cloud services from AWS, Google and Microsoft to its managed services portfolio.

Rackspace also went private last year after Apollo Global Management and its investors acquired it for $4.3 billion. Eazo came in as Rackspace's CEO earlier this year after leading EarthLink, which was acquired late last year by Windstream.

Terms of the acquisition were not disclosed. The deal is expected to be finalized by the end of 2017, pending financing and regulatory approval.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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