SaaS data loss: The problem you didn’t know you had

After suffering a disappointing second quarter, Rackable Systems wants to dump its RapidScale storage appliance business which the company purchased for nearly $40m only two years ago.

The data center vendor said today it plans to sell RapidScale along with its development team, patent portfolio and hardware assets. Rackable has already taken a $1m charge to break its lease on the facility that housed the RapidScale business and moved the engineering crew into its main Fremont, California headquarters.

In Rackable's Q2 earnings conference call, CFO James Wheat said the company reviewed RapidScale's progress and concluded the business wasn't likely to meet expectations.

Rackable's filing with the US Securities and Exchange Commission chalked up the lowered prospects to an "inability to license certain third party software on reasonable commercial terms."

The RapidScale line is a combination of storage appliances and file system software made to improve the performance of data sharing in large clusters. Rackable acquired the business when it purchased Terrascale for $38m in cash in August 2006.

"I would say it's a fine product. It's a good market. But we've concluded it's not a good fit for Rackable and thus the strategical alternative," said Wheat during the Q2 earnings call.

Despite putting the business up for adoption, Rackable apparently would still like some visitation rights.

"The most attractive alternative would be a sale of the asset to a partner who can invest in the technology — because it's going to take investment and a partner who has an expert sales and service force to deploy complex software," said Wheat. "And hopefully we'll be able to maintain a strong relationship with any prospective buyer." ®

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