Loudcloud Banks on Qwest

Company, customers see partnership pluses.

Like many of its management service provider brethren, Loudcloud Inc. has been hampered by initial hype followed by a disappointing reality.

In fact, late last month, the Sunnyvale, Calif., company reported a second-quarter loss of $76 million.

But around the same time, Loudcloud announced a partnership with Denver-based Qwest Communications International Inc. Loudcloud officials said that they hope the deal will bolster their bottom line, give them access to more customers and sales staff, and protect them against the financial problems of a key hosting partner, Exodus Communications Inc., of Santa Clara, Calif.

And Loudcloud customers said they are optimistic the deal will benefit a vendor they said has done a good job in meeting their needs.

"We got off to a rocky start at the beginning. We were a young company dealing with another young company. But for the last year, theyve been great," said Larry Greenberg, CIO of StatementOne, an application service provider for the brokerage industry based in Lawrenceville, N.J. "It would have been cost-prohibitive and time-prohibitive to try to do it alone."

"I was pretty pleased to hear [about the deal]. What Im hoping it avoids is trouble down the road," said Adriaan Bouten, vice president of IT and business development for USAToday.com, in Arlington, Va. "They truly understand what I was looking for."

The brainchild of Netscape Communications Corp. co-founder Marc Andreessen, Loudcloud has been plagued by public misunderstandings of its services, a disappointing initial stock offering and user accusations of corporate arrogance, high prices and poor customer service.

Loudclouds marquee users may not be as enthusiastic as its marketing implies, eWeek found—most did not agree to interviews, and Ford Motor Co., a spokesman for the Dearborn, Mich., carmaker emphasized, is merely conducting a "pilot project." Users at non-behemoth-size companies, though, said Loudcloud understands their problems better than the competition does.

After a few go-arounds, theyre getting it," said Steve Baunach, chief technology officer at direct materials procurement company BlackHog Inc., also of Sunnyvale.

For Qwest, the deal provides Internet management expertise, which company executives admit has been their key missing link and a test of future partnerships with companies in management technologies such as IP telephony, streaming media and wireless services, said Chris Ancell, vice president of Web hosting services.

Until now, Qwest hosting users requesting management services "either scaled back the expectations, or we cobbled together a solution taking a couple of different approaches," Ancell said.