Rackspace, the San Antanio based Cloud Infrastructure provider, announced on tuesday that their profits for the fourth quarter has surged by 32%, increasing from rom $6.8 million to $9 million. Rackspace, which was started in 1998, claims to have 70,000 customers now with over 51,000 cloud computing customers. Even though it is not clear how they arrived at this number, I would assume this includes a large chunk of Mosso customers, many of whom were from their shared hosting category. Even without any breakdown, it is easy to see the success of Rackspace’s cloud division. After establishing themselves as a leader of managed hosting with focus on fanatical support, the idea for Mosso was developed by two Rackspace employees inside a Wendy’s restaurant in 2004. They thought about the value of tapping into clustering, load-balancing, and virtualization. In 2005, the company adopted their vision and Mosso was born. In 2008, Rackspace announced the acquisition of Slicehost and Jungledisk software. Eventually, they expanded their product line as CloudSites, CloudServers and CloudFiles and rebranded under the name RackspaceCloud. They forged ahead in the cloud computing marketplace by releasing their API as Open Source and with a release of a marketplace in their ecosystem.
In a conference call yesterday, Rackspace reported that their cloud computing services raked in $17.1 million in revenue during the fourth quarter, up 93 percent compared with same quarter last year. In the first quarter of 2009, Rackspace reported earnings from their cloud offerings were 10.9 Millions. The cloud earnings of fourth quarter shows a continued significant increase in earnings from the cloud computing front.
According to San Antonio Express News, the revenue from the RackspaceCloud is going grow further by 2012.
Cloud computing now accounts for roughly 9 percent of the company’s total revenue, but that’s expected to grow to about 14 percent this year, according to Tier 1 Research. By 2012, Tier 1 Research estimates Rackspace’s cloud computing business will generate $272 million in revenue.
This is good news for Rackspace and, definitely, a good news for the cloud providers. As businesses get more comfortable with the idea of cloud computing, we are going to see more and more adoption of public clouds. With Amazon Web Services having huge success, Rackspace and, now, Microsoft are well positioned to challenge Amazon.
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