Loudcloud Inc., originally an IT management outsourcer, announced a crucial strategy change today, repositioning itself as a software company and selling its services efforts to Electronic Data Systems Corp.
Loudcloud will now be called Opsware Inc., taking up the product name of its core software suite, which was updated last month.
"The EDS licensing agreement further validates the technology and the urgent need for IT automation to drive down costs," said Loudcloud CEO and co-founder Ben Horowitz said, through a press statement.
For $63.5 million, EDS, of Plano, Texas, gets Loudclouds managed IT service, and licenses to integrate the Opsware technology into its own network, officials said. EDS network spans 50,000 servers in 14 major data centers and 140 user-owned and regional data centers worldwide. The acquisition of the hosting business should close in September, when about 140 Loudcloud employees in Northern California, Virginia, New York, and the United Kingdom will transition to EDS, officials said.
For users of Loudclouds services, "therea potential risk there," said industry analyst Andy Schroepfer, of Tier One Research, in Plymouth, Minn. The new Opsware Inc. will have about 100 employees, and so customer service is the immediate issue, while the fall data center migrations are another big concern, he said.
But this is not new ground for EDS, which struck a similar deal with Storage Networks Inc. earlier this year, he noted.
"Theyre looking for the best practioes of all the former managed services players," Shroepfer said of EDS. "You can be sure that IBMs going to be focusing in on the customers."
Loudcloud, the Sunnyvale, Calif., brainchild of former Netscape Communications Corp. co-founder Marc Andreessen had shown signs of growth, acquiring smaller rival Frontera Corp. earlier this year. But its numerous announcements of name-brand customers like Ford Motor Corp. were far smaller deals than company representatives had indicated, sources have said.