As a private company, it will be easier for Rackspace to make the business changes it needs to be more competitive and to ride out the financial turbulence that may come with it.
“They won’t have the intense quarter-to-quarter reporting pressure on them any more, which will give the company the breathing room it needs to make significant changes,” Olds said “Rackspace could offer enterprise users an easier path to the cloud, assuming they can differentiate their products and services.”
Gottheil noted that while Rackspace couldn't keep up with the major cloud vendors because it lacked the scale to compete, now the company can use its expertise to collaborate with enterprise users and the big vendors.
The acquisition should give the company the elbow room to make that happen.
“You're effectively closing down a business because it can't compete and starting up a new business that you believe can compete,” said Gottheil. “The closing down and starting up overlap. They've been doing both for a while… The new Rackspace is essentially a startup, and startups need to be privately funded.”
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