As cloud computing grows more competitive, two of the industry's principal providers are teaming up. Akamai Technologies
Initially, the two will work together to give customers enhanced access to Cloud Files, Rackspace's online media and file storage service. Long-term, Rackspace plans to resell key Akamai services such as application acceleration and e-commerce support.
Interestingly, the latter may offer the biggest opportunity. In an interview, representatives of both companies cited e-commerce as an area of focus, since they already serve "hundreds" of common customers, many of whom sell online.
The beauty of an extended network
Teaming up also offers technical advantages. By necessity, Rackspace combines its vast server network into a few large facilities, without concern for geographic proximity to its customers. Akamai works in the opposite manner, placing tens of thousands of servers throughout the world to create what amounts to a second Internet. Having Akamai as a partner extends Rackspace's reach.
For e-commerce customers, this extended network offers two benefits. First, faster loading of transactions and static files (e.g., a collection of demonstration videos, an image catalog). Second, delivering transactions over Akamai's network adds security. Why? Akamai's network is a layer removed from the web, enclosing data in a protective cocoon. Think of it as another lock for a digital miscreant to pick.
So both parties benefit from teaming up. Will investors also see gains? That's tougher to say, but a combination makes sense with demand for cloud computing services rising.
Now it's your turn to weigh in. What downstream impact will Akamai and Rackspace's partnership have? Use the comments section below to explain your thinking. You can also rate Rackspace Hosting or Akamai in Motley Fool CAPS.
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Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Akamai at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy suggests you and it team up. Watch for traps and all that.