As many of you know, a lot of the sites that use Rackspace as their hosting provider were down for about an hour yesterday. That’s because Rackspace went down. Apparently, it was a power outage at a data center that caused it, an incident report that we’ve obtained explains.
While Rackspace has backup systems in place, a series of events apparently caused those backups to fail, resulting in the servers going down. Here’s the key nugget:
Last week, Michael Jackson’s death caused sites to fail left and right. Today, it’s a very different problem. The hosting service Rackspace has been completely down for the past 30 minutes or so. Don’t believe us, just listen to Justin Timberlake or Michelle Malkin, both of which have sites on the service and took to Twitter to complain.
Apparently, it’s an entire network outage and so the usually very responsive Rackspace team cannot even respond to emails or tweet (though I’m sure we’ll be seeing some updates from smartphones shortly). Along with sites like Timberlake’s and Malkin’s, the popular event site, EventBrite, is apparently down as well.
Fever is a hot new RSS reader that aims to cure “second inbox syndrome, unread item guilt, and unbold elbow.” In other words, the common plights of the modern RSS power user.
Besides offering a full-featured feed reader, the application attempts to create a personalized Techmeme by scanning a user’s feed list for popular (or hot) links. Fever then groups these links into stories and assigns each a “temperature.” This allows a user to quickly keep a pulse on what’s going on in his or her “slice of the web.”
The other refreshing feature of the app is its move away from email inbox-style unread counts. As a long-time Google Reader user, I always dreaded the experience of returning from an offline vacation only to find several thousand unread items in my reader. With Fever, the emphasis is on dividing subscriptions into two camps: must-reads (called Kindling) and everything else (Sparks). By moving the “hit-or-miss” feeds into the Sparks bin, Fever ensures that a user gets only the most relevant content.
Our roundtable on cloud computing is coming up next week. (Get tickets here via Eventbrite: $75 each based on availability). In addition to the previously announced speakers, I am happy to announce a few more very special participants: Amazon’s chief technology officer Werner Vogels, Ning CEO Gina Bianchini, Facebook VP of Engineering Mike Schroepfer, and Jon Engates, CTO of Rackspace. Below is the complete list of Roundtable Participants
Roundtable Discussion
Werner Vogels, CTO, Amazon
Mike Schroepfer, VP of Engineering, Facebook
Gina Bianchini, CEO, Ning
John Engates, CTO, Rackspace
Marc Benioff, CEO, Salesforce.com
Vic Gundotra, VP Engineering, Google
Amitabh Srivastava, Corporate VP, Windows Azure
Lew Tucker, CTO, Cloud Computing, Sun Microsystems
Scott Dietzen, SVP Communications Products, Yahoo
Paul Buchheit, Co-founder, FriendFeed; creator of Gmail
Roundtable Moderators:
Erick Schonfeld, co-editor TechCrunch
Steve Gillmor, editor TechCrunchIT
The roundtable will be preceded by five cloud computing enterprise product demos which will be evaluated by a panel of judges TechCrunch50-style.
There will also be a networking party afterward where more companies will be giving product demos. We couldn’t do this without our sponsors Microsoft and Ribbit. To find out about how to become a sponsor or get a demo table please email Jeanne Logozzo or Heather Harde. (More after the jump).
Cloud computing keeps advancing like rolling thunder. Amazon today announced a major upgrade to its EC2 compute cloud service and Sun co-founder Andy Bechtolsheim has decided to spend more time at his startup Arista Networks, which sells 10-Gigabit Ethernet switches aimed at handling the loads at cloud-computing data centers. And just yesterday, RackSpace announced two small acquisitions to help it better compete against Amazon in the cloud computing as well.
The biggest news today comes from Amazon, which is staking the “beta” label off of its EC2 service and announcing the following upgrades:
Web hosting provider Rackspace has acquired JungleDisk, an online backup service, and Virtual Machine provider Slicehost in a deal designed to help bolster its offerings against top competitor Amazon Web Services. The announced acquisition price is $11.5 million in cash and stock, with the possibility of up to an additional $16.5 million depending on performance.
Jungle Disk is a file storage and backup service that up until now has relied on Amazon’s Simple Storage Service (S3). With the new announcement the company says that it will begin offering the service using Rackspace’s similar service Cloud Files, but will continue to support storage using Amazon with plans to support even more services in the future.
Slicehost offers developers “slices” in Xen-based virtual servers that are much cheaper and generally easier to use than a traditional dedicated server. The service is a direct competitor to Amazon’s Elastic Compute Cloud (EC2).
After filing for an IPO last April in which it hoped to raise $400 million, Web hosting provider (and cloud-computing aspirant) Rackspace finally priced its IPO last night at $12.50 a share. That would have brought in $187.5 million, or half what it was hoping for. But it opened this morning at $10 (ticker: RAX). It’s been been going up since then to about $11.
And Rackspace is a solid company financially. But in this market, any IPO is a sign of hope (there were no VC-backed IPOs last quarter). Rackspace backed off from an IPO once before, in 2000. It’s been champing at the bit to go public for a long time. It looks like the shares are trading up. Let’s see where they end the day.
(Disclosure Rackspace is a TechCrunch advertiser).
Update: Rackspace ended its first day of trading at the same price where it opened: $10. Not a confidence builder for other IPO-aspirants.
Web hosting provider Rackspace filed for an initial public offering with the SEC last night, as we predicted it would. The company will try to raise $400 million, and it intends to set the IPO price through an auction, much like Google did. The underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse, and WR Hambrecht & Co. (the leading proponent of such IPO pricing). Pricing through an auction is designed to make sure the company raises the most money possible instead of giving up a first-day pop to investors who are allocated shares by the investment banks doing the deal. Shares will still be allocated to such clients, but anyone who bids beforehand in the auction at or above the eventual IPO price will also get shares. All in all, it is a much more efficient way to price an IPO and more companies should do it.
With the filing we also get a clearer picture of Rackspace’s business and financials. Its revenues grew 62 percent last year to $362 million, but it posted net profits of $17.8 million, which were down 10 percent from the year before. Cash flows from operations, though, remained healthy at $105 million last year, up from $61 million in 2006. (Click on the table below for a bigger image and more data):
The decline in profits was because the company spent a lot more staffing up and spending more on sales and marketing. About half of the $53 million increase in its cost of revenues last year was attributable to the fact that it nearly doubled the number of employees to 2,021 (of that, data center employees went from 576 to 994, and sales and marketing headcount went from 224 to 353). Servers, software licensing costs, bandwidth, power and rent made up most of the rest of the increase.
Another interesting tidbit: that truck accident that took down one of its data centers in Texas last November cost the company $3.4 million in credits to customers.
At the end of the year, it had 29,193 customers, compared to 12,677 the year before. But nearly all of that growth was due to its acquisition of Webmail.us (i.e., they are hosted e-mail customers, not hosted Website customers). Rackspace has 36,692 servers across seven data centers, 114,749 square feet of data center space, with a 61 percent utilization rate. The company makes $3,504 a year per square foot, a number that has been growing nicely, illustrating that Web hosting is a scale business with increasing returns the more servers that can be rented out.
The last time Web hosting provider Rackspace filed for an IPO was back in March, 2000, at the peak of the first Internet bubble. Now, it may be about to do so again. Perhaps as soon as tomorrow or Monday, according to one tipster who tells us that email to that effect are circulating inside the company. (Rackspace is a TechCrunch advertiser, but our source is not an employee).
There are no filings yet with the SEC, but press releases touting its revenues have mysteriously been stripped from the company’s site. Here is one that’s been cached, announcing 2006 revenues of $224 million. Various reports put quarterly revenues for 2007 at $75 million, $84 million, and $96 million, respectively for each of the first three quarters, which suggests that full-year 2007 revenues were north of $350 million. Rackspace claims to be profitable, and has more than 15,000 customers. A major outage last November caused by a traffic accident near its Dallas data center was noticed across the Web.
Rumors of an IPO have been swirling recently. The company just hired a new chief financial officer on March 31. Last October, it acquired Webmail.us and it offers cloud computing services that compete with Amazon’s Web Services through its Mosso brand. In January, it shifted strategyto emphasize its utility computing business model.
It is time to pull the trigger.
Last week’s incident with Amazon Web Services briefly going down may have raised questions about the reliability of cloud computing, but demand is high enough for competitors to keep trying to get into the game. The more companies that enter this space, the cheaper and more competitive that Web-scale computing should become.
Today, hosting provider Rackspace is offering a new cloud computing service through its subsidiary Mosso. (Disclosure: Rackspace is a TechCrunch advertiser). The service competes with Amazon’s Elastic Compute Cloud (EC2), although it doesn’t require any load balancing or other administration. It also competes with Joyent and Media Temple’s Grid Service. Pricing starts at $100 a month for:
—50 GB of storage
—500 GB of bandwidth for transferring data
—3 million HTTP requests.
From there additional capacity per month costs:
—$0.50/GB of storage
—$0.25/GB of bandwidth
—$0.03/1,000 HTTP requests
This is a bit more expensive than Amazon (which charges in a different way) but a lot cheaper than the $350 to $400 a month Rackspace charges to host a dedicated server for a Website.
Mosso bills itself as a Web app hosting service. Applications are hosted on redundant server clusters (although the data center is only in one location, so something could take the whole thing out—like, say, if a truck were to run into a nearby power transformer). Coders choose what technology stack they want their apps to run on and upload their code. Mosso supports both Windows and Linux, PHP, Ruby on Rails, .Net, Perl, Python, MySQL, and SQL Server. (Amazon, in contrast, does not support Windows). Mosso does not yet support Java applications, but it is working on that. The company actually has been testing the service for nearly two years and already runs 37,000 apps.
37Signals is having a bad morning, according to their current home page image above. They’re pointing fingers at their service provider, which was (and we believe still is) Rackspace. Last November they suffered a three hour outage along with other Rackspace customers.
Update: It’s back up, total outage was about 2 hours. Per the comments, 37Signals doesn’t seem super duper happy with Rackspace these days.
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