Rackspace IPO: Cloud Computing Goes Public

Wall Street, meet "cloud computing."

Rackspace Hosting on Aug. 7 became one of the first full-time cloud hosting and data storage companies to go public when it announced its IPO (initial public offering) of 15 million shares of its common stock at a price of $12.50 per share. Rackspace's common stock began trading on the New York Stock Exchange under the symbol "RAX" on Aug. 8.

Rackspace provides IT systems and computing as a service to about 33,000 customers worldwide. The company's offerings include managed hosting, e-mail hosting, cloud hosting and platform hosting.

The company launched a cloud storage service called CloudFS in May 2008 following the April 28 announcement of its IPO. Rackspace is using a Google-like auction sales method in an attempt to bring in about $400 million.

Key features that set Rackspace's CloudFS apart from established competing services such as Amazon EC2 (Elastic Compute Cloud) and Google App Engine are that data will be available to users anywhere, anytime, and there will be no charges for incoming or outgoing bandwidth for Rackspace customers.

Users wanting to store large files, such as movies, will love that idea.

CloudFS is currently at the private beta stage for testing and refinement and is expected to open as a public beta soon. Pricing has not yet been determined.

"It's sort of an odd time to be launching an IPO, given the condition of the greater economy. Venture capital has been tight the last few months, too," Charles King, principal analyst at Pund-IT, told me.

"Hosting companies are in an intriguing position, with the ongoing drumbeat of Web 2.0, SAAS [software as a service] and the usual hosted services. The cloud proponents see it [going public] as an inevitability."

Certainly the success of companies like Google and Amazon.com has proven the cloud model can work for enterprise entities, King said.

"People talk about the data center as getting simpler, as a watchword," King said. "But I don't see it getting simpler. They're getting bigger and more complex every time. So the cloud computing model can be an attractive alternative for some companies."