Rackspace Launches New Version Of OpenStack Cloud
April 16, 2012
Rackspace (RAX), a leading provider of cloud computing services, plans on Monday to release a new version of its OpenStack, the open-source cloud platform it and others are promoting as a tech standard.
While many companies support OpenStack, this group does not include two of Rackspace’s biggest cloud rivals, Amazon.com (AMZN) and Citrix Systems (CTXS).
Rackspace has emerged as a fast-growing player in cloud computing services, which let companies store and access their data via the Internet, or the "cloud," reducing their hardware and overall IT spending. Rackspace’s year-over-year sales have jumped 32% in each of the past three quarters. Per-share profit has risen at least 56% in that span. And company shares are up 31% this year…
The new OpenStack is more powerful, Mark Interrante, Rackspace’s vice president of products, told IBD.
"It’s more scalable," he said. "It’s more elastic, so you can have many more servers simultaneously. And it’s built in a more modular fashion, so we can incorporate new (software) technologies that we build in OpenStack more quickly.
"We think this will work very well with fast-growing companies that are trying to scale quickly."
More than 150 companies have adopted OpenStack since the company co-founded the open-source group with NASA in 2010. Rackspace says more than 200 software developers from 55 companies have provided software code to OpenStack.
The new version is much more stable and robust, which should make it more appealing to large companies looking for a cloud service, says Chris Larsen, an analyst for Piper Jaffray & Co.
"It’s an important step," Larsen said.
Prior versions were less reliable, he says.
"It was buggy," Larsen said. "The last thing that anyone wants to do is run on an unstable platform."
Now, he predicts more people will adopt it.
Rackspace’s foundation for OpenStack came from its acquisition of Slicehost, a cloud computing and website hosting provider in 2008.
With the new version, Rackspace has moved beyond the fledgling stage of cloud services, says Jonathan Schildkraut, an analyst for Evercore Partners.
"They have created enough momentum and stability to really push their own transition onto the OpenStack platform," he said. "Now we expect the momentum around broad adoption of OpenStack, as the open-source platform for cloud will accelerate."
But Citrix launched its rival CloudStack cloud computing service in February. And Amazon recently beefed up its rival Amazon Web Services cloud service with a new search feature for developers of its own open-source service.
Rackspace will have to keep rolling out new versions of OpenStack, Larsen says.
"Cloud is moving so fast," he said. "People are going to have to constantly adopt and implement the software, whether it’s a fix or a new service."
Rackspace is also releasing software, gear and services designed to work on the new version of OpenStack. Companies will have to pay for some of those products.
OpenStack isn’t directly responsible for driving any of Rackspace’s financial success, but it helps the company sell other services, Schildkraut says.
"There are revenue opportunities that don’t exist for Rackspace today that could exist for them longer term," he said.