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Cox Business Bulks Up With RapidScale Buy

Jeff Baumgartner

Cox Business is courting the cloud and looking to amp up growth opportunities with its acquisition of RapidScale.

Financial terms were not disclosed, but the buy plunges Cox Business, a unit of Cox Communications Inc. , into the managed cloud services market with a portfolio that includes recovery, backup, security, mail services and an SD-WAN service called NetScaler.

Founded in 2008, RapidScale has 69 employees and is based in Irvine, Calif.

The deal also aims to amplify Cox Business's reach into several verticals, such as healthcare, manufacturing, hospitality, government, small business and financial markets. With a greater emphasis on managed and hybrid cloud services, Cox's deal for RapidScale is reminiscent of Time Warner Cable's 2011 play for NaviSite (TWC is now part of Charter Communications). (See TW Cable Buys Into the Cloud.)

Cox Business also will be looking for RapidScale to build on an annual revenue stream that has eclipsed $2 billion.

In addition to becoming a thorn in the side of telcos, the business services segment has become a key growth engine for the cable industry. After initially focusing on small businesses, MSOs have since moved up-market and placed a target on midsized businesses and are starting to develop products and strategies to serve enterprise customers.

Last year, business services generated more than $16 billion in revenues for the top seven US cable operators, and will approach $18 billion this year and near the $20 billion mark in 2019, according to a new Heavy Reading forecast.

“This kind of acquisition makes a lot of sense for an operator like Cox,” said Alan Breznick, cable/video practice leader of Light Reading. “Smaller and medium-sized businesses have been looking to make greater use of cloud-based solutions but typically don’t have the IT resources to do so effectively. If Cox can integrate RapidScale’s offerings into its commercial portfolio, it should help the MSO capture an even greater share of the SMB and smaller enterprise markets.”

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The acquisition "grows our business in a strategic manner" and enhances Cox Business's cloud platform for businesses of various sizes across verticals, Steve Rowley, executive vice president, Cox Business, said in the announcement.

The RapidScale deal builds on other recent acquisitions or investments by Cox Communications in Blueprint RF (managed network services for hotels), Unite Private Networks (high-capacity, fiber-based networks and services for schools, government, carriers and data centers), Hospitality Network (in-room video, voice and data services) and Cox Business Security Solutions.

— Jeff Baumgartner, Senior Editor, Light Reading

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