Rackspace Enters Small Biz Email Race With Webmail.us Buy

[qi:055] Small- and medium-sized businesses are the hot target markets right now, whether it’s voice and broadband or web services. The biggest opportunity, however, seems to be in hosted email, as Yahoo’s (YHOO) $350 million bet on Zimbra and Google’s (GOOG) Apps initiative demonstrate.

Rackspace, a San Antonio, Tex.-based managed hosting company, today made its own move to tap the opportunity by acquiring eight-year-old Webmail.us of Blacksberg, Va. The purchase price wasn’t disclosed, but I suspect it was a substantial amount of money.

With some 70,000 companies as clients and 600,000 paying business email accounts, Webmail.us expects to have revenues of around $6 million in 2007. It is popular because of its spam protection features, quality service, and a web interface that is both rich and just generally impressive.

Rackspace, meanwhile, is rumored to be in the running for an IPO. Its acquisition of Webmail.us is another way to distinguish itself from being just a hosting company. Lew Moorman, senior vice president of corporate strategy and product development at Rackspace, believes the opportunity for offering email services to small- and medium-sized businesses is wide open, even with competition from Yahoo and Google.

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