Rackspace racks up IPO

Rackspace Holdings became the first company to complete an IPO since March when it priced its shares at $12.50 Thursday (the price fell to $10.01 Friday on the first day of trading).

The hosting company doesn’t specialize in storage, but is beta testing its CloudFS Web-based storage service that competes with Amazon S3 and others. Rackspace also launched a dedicated NAS (DNAS) storage service for in June aimed primarily at file sharing Web sites and companies that deal with rich media files. That’s built on NetApp FAS2000 storage, and Rackspace has an Unmetered Backup service trough a partnership with CommVault.

Only a small piece of Rackspace’s revenue ($130.8 million last quarter and $362 million in 2007) come from storage products, and it could be tough growing in the storage space with competition heating up.

“Storage is tough [for hosting companies],” Forrester Research analyst Stepanie Balaouras said. “If it’s traditional transaction oriented processing, the storage really needs to be in close physical proximity to the servers for performance reasons. If it’s non-transaction processing — you need to store Web 2.0 type of content like photos, audio, and video — you’re less performance sensitive and you can rely on storage services in the ‘cloud.’  But a lot of startups who need this type of storage service seem to be going with Amazon S3.”

Considering Amazon’s track record for outages, maybe Rackspace is getting into storage at the right time.