Update: Microsoft's Razorfish taps Rackspace for cloud hosting

Subsidiary opts against waiting for Microsoft's own Windows Azure

Microsoft's Razorfish has chosen Rackspace to host the development of new Web sites and applications rather than wait for its parent company to release its own cloud-hosting platform Windows Azure.

Razorfish is working with Rackspace's Mosso hosting division to build Web sites and applications on Rackspace's Cloud Sites and Cloud Files services, according to Rackspace.

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Razorfish, which operates independently, is an online advertising agency acquired by Microsoft as part of its purchase of aQuantive, a digital marketing services company, in 2007.

Specifically, Razorfish is designing microsites, community platforms, blogs, and Web video for its clients using Mosso, Rackspace said in a press statement. The sites are being designed specifically to handle large traffic spikes during major promotions and product launches.

Using a hosted services platform saves companies from having to build their own infrastructure to support new applications and services. They also can plan for traffic spikes by purchasing more bandwidth than usual when they expect sites to get more traffic, allowing them to manage IT expenses more effectively.

Rackspace, formed in 1998, was a private company until it began trading on the New York Stock Exchange last August. The company offers a range of managed-hosting and cloud-hosting services.

Cloud computing and hosted services are becoming an increasingly attractive options for companies that don't want the hassle or expense of building out their own IT infrastructure, particularly now as the global economy is in a recession. Research firm IDC has predicted that the U.S. market for Web hosting services will increase about 10 percent in the next several years, from $9 billion in 2007 to $14.6 billion in 2012.

Microsoft unveiled Windows Azure in October as its application-development and hosting platform in the cloud; it is expected to be generally available later this year. An early version of and a software development kit for Azure are available now for testing.

Razorfish spokeswoman Sally O'Dowd said Thursday that Razorfish has been evaluating Azure for "both internal and external client needs" and will consider using it for clients once it is commercially available.

She added that Razorfish has always been "technology agnostic," and makes technology choices "based on what is best for the client."

Earlier this week, Doug Hauger, general manager of marketing and business strategy for Microsoft's cloud infrastructure services group, told a group of investors at the Thomas Weisel Partners 2009 Technology & Telecom conference that Microsoft plans to announce pricing for Azure soon. He also said the service will cost less than the price companies pay to run a server on premise.

Customers also will have a pay-as-you-go option for the service, but can get discounts if they want to prepay, he said. A transcript of Hauger's talk is available online by downloading it from the Windows Azure blog.

This story was updated on Feb. 19, 2009.

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