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Loudcloud abandons services model

Managed services provider Loudcloud has sold its managed services business to system integrator Electronic Data Systems (EDS) for $63.5m (£42.9m). Loudcloud will now focus on becoming exclusively an enterprise IT automation software vendor using the Opsware brand name.

In addition to its purchase of Loudcloud's services operations, EDS said that it has signed a three-year $52m (£35m) licensing agreement to offer Loudcloud's Opsware automation software to its customers, according to Jeff Kelly, president of EDS Global Hosting Services.

The new agreement will enable automation of application management and services delivery, first across EDS' managed Web hosting business and eventually running on 50,000 servers in 14 data centres and 140 client-owned and regional data centres around the globe, he added.

"[The new relationship] reinforces our leadership position in hosting and Internet Web services," Kelly said. "We think [Loudcloud's software and services] gives us an advantage and automates processes that we run manually today."

Kelly said the deal is expected to close in September, at which time the licensing agreement effectively kicks in. About 140 of Loudcloud's employees will be transferred to EDS.

As part of its transition to using the Opsware name, Loudcloud will introduce an enterprise version of its IT automation software later this month called Opsware System 3, said Tim Howes, chief technical officer of Loudcloud. He said his company often encountered customers in need of IT infrastructure management but who were unwilling to outsource for reasons such as security, audit concerns, and data centre investments.

Opsware System 3 will feature a set of service automation modules (SAMs) that will be bolstered in later releases. Howes said the first version of Opsware's software product will feature modules focused on four areas including infrastructure provisioning; application provisioning and rollback; security management; and asset auditing and tracking. The platform will contain an extensible Knowledge Pack and Relationship Map inside the software automation engine to help customers manage distribution across various technologies and systems. The software will run on the Solaris, Linux, and Microsoft Windows platforms. HP-UX and AIX support will be available in the autumn.

Dubbed "Project Archimedes" internally at Loudcloud, Opsware System 3 has already gained a fair share of customer interest. DLT Solutions - on behalf of a large US government department seeking greater control of Oracle deployments - as well as financial services behemoth JP Morgan Chase, have signed up for the new product, according to Loudcloud officials.

However, Loudcloud must take care to not to dilute its automation message as it shifts from services-based support to a software licence model and relinquishes control of its Opsware technology, said Ted Chamberlin, network analyst for analyst group Gartner.

Howes said pricing has not been set for Opsware System 3.

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