Rackspace Finds Silver Lining In Power Outages - InformationWeek

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Rackspace Finds Silver Lining In Power Outages

Rackspace Managed Hosting knows a good business opportunity when it sees one. The Texas Web-hosting company has discovered a steady flow of new customers in California's ongoing energy crisis. By offering what it calls a "blackout special" during the past several weeks, Rackspace has racked up about 10 new customers, with more in the pipeline. The bait? A waiving of all setup fees, which can run as high as $60,000 for the company's larger customers.

Rackspace VP Lew Moorman says managed hosting has been a hot market even as the economy has slowed, with many companies looking to have someone else manage their Web servers. Now, Moorman says, a precarious power supply and the continued threat of rolling power outages should cause companies to reconsider having their Web sites hosted in California. Backup generators simply aren't enough insurance, he says. "This is a real issue," Moorman says. "If this thing turns into a prolonged blackout situation, generators aren't going to make it."

One company that took advantage of Rackspace's promotion is NetYourWork Inc., an application service provider that's about to roll out a suite of hosted financial applications. Jim Hopp, VP and chief technology officer, says the company didn't want to build its own data center because it wanted to focus its efforts on its product launch. Hopp, who lived in the Bay Area during the 1989 Loma Prieta earthquake and took note of the impact on financial-service companies, says he knew immediately that he didn't want to use a hosting service in California, where another earthquake could knock out NetYourWork's site. "The power problems in California just sort of added to that," he says.

Technojobs, a London-based IT recruitment site that attracts 3,000 visitors a day, faced a more pressing situation. The company's site was being hosted by Verio Inc. in California, but several weeks ago its server began to go down at about the same time every day, sometimes for as long as 12 hours. To the amazement of managing director Stelios Fesentzou, inquiries to Verio were met with no response. "They wouldn't tell us what was happening," Fesentzou says. "We pretty much figured [power] was the problem." When the problem persisted for a few weeks, Fesentzou found out about Rackspace and made a quick switch.

Rackspace introduced its blackout special in January with the intent of offering it until March 1. Not surprisingly, Moorman says, the company is considering extending the promotion.

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