Rackspace Buys SaaS Customer Webmail

Rackspace Managed Hosting made its first acquisition Monday, buying Webmail.us - a business e-mail service that is also a high-profile Rackspace customer. The deal is "an exciting development for Rackspace and our utility computing efforts," Lew Moorman said on the Racklabs blog. Software as a Service (SaaS) is major focus for Rackspace, which says many of its 1,100 new customers in the second quarter will use its infrastructure to support their SaaS apps.

Moorman, the senior VP of Strategy, said the Webmail.us deal is part of an intensifying focus on SaaS at Rackspace. An excerpt:

What's interesting about the deal is that last year Webmail.us shifted a large chunk of its e-mail storage operation from Rackspace to the S3/EC2 utility computing service at Amazon.

In October of 2006, Webmail unveiled a new data backup system using Amazon Web Services. Bill Boebel, the CTO of Webmail.us, blogged about the rationale for splitting its services between the two providers:

Webmail's executive team clearly retained faith in Rackspace, and is betting their future on the San Antonio provider. "We don't see this as an exit strategy," Webmail CEO Pat Matthews said of the deal. "We're calling this phase two."

Webmail projects revenue of $6 million this year. Rackspace just announced revenue of $84.0 million in the second quarter of 2007, representing a 61.6 percent increase over the second quarter of 2006. Rackspace says it has experienced 34 consecutive quarters of revenue growth since the company's inception. In August Rackspace announced plans to spend $100 million to convert a vacant San Antonio shopping mall into its headquarters.