How the Channel Fueled Cox's Acquisition of RapidScale

Executives of the newly married Cox and RapidScale aim to create a cloud computing powerhouse.

Cox Business announced last week that it bought RapidScale for an undisclosed sum. Buying the cloud provider solidifies the cable company’s journey into IT and managed services.

Steve Rowley, executive vice president of Cox Business, tells Channel Partners that customer feedback led to the transaction.

Cox’s Steve Rowley

“The demand and appetite from our customers as of late has really pushed us into looking to more and more cloud application services. There’s a push from our customers to drive in that area and to get into an environment where we’ve got proactive managed services and are providing applications and services that meet their needs.”

Cox has a business customer base of more than 400,000, many of which are SMBs. We noted last month, however, that Cox has been adding businesses of larger sizes to its customer list. Rowley says about 75 percent of his company’s business customer base is SMB, but Cox has also attracted larger clients from verticals like health care, hospitality and finance. And it’s the addition of RapidScale’s managed cloud services that he says will expand Cox’s reputation as a trusted technology adviser.

“It’s the IT space that our customers are spending dollars and wallet share on today, and it’s going to allow us to offer a larger breadth of services with the RapidScale acquisition,” Rowley said.

RapidScale CEO Randy Jeter tells Channel Partners that the two organizations had been working together prior to the acquisition for more than a year and a half and acquired their first joint client about six months ago. Rowley says Cox admired RapidScale’s culture, in addition to its expertise and resources. That bullishness is one of the reasons RapidScale is going to maintain its structure after the acquisition. It will be part of the Cox New Business Ventures unit, which also houses the recently acquired Blueprint RF.

Jeter says Cox brings the necessary capital and support to build “the future of managed cloud services.”

RapidScale’s Randy Jeter

“They’re bringing in one of the most powerful networks. When you look at Cox long-term, they want to have a cloud pillar as part of their entire strategy,” Jeter said. “I think any powerhouse, $20 billion, family-owned company that’s not public that is looking at building pillars long-term — wants to find a partner to do that with.”

Cox brings transport and connectivity to the table, and RapidScale offers its own global cloud platform.

“It was a perfect fit in that we built a service provider business around IT on our compute with the margin and the growth necessary to attract Cox to the table to say, ‘We like your model. We want your model. Let’s build together,'” he said.

Jeter says Cox has been very supportive of……RapidScale’s 100-percent channel driven strategy. RapidScale has multiple close relationships with master agents, including Telarus and Intelisys, who Jeter says will be happy to work with a partner like RapidScale that has an increased breadth of offerings and deep financial backing.

Cox Business’ channel program has been around for more than six years, and Rowley has worked with partners at multiple companies. He led channel partners at Sprint Nextel from 2006 to 2009.

“I look at the channel as a very important way to go to market. Knowing some of the senior executives with these companies, it’s clear that they’ve built deep relationships with customers,” he said. “Being able to partner with those owner and operators and drive deeper into their customer base prospecting opportunities is something we value very highly.”

Jeter assured partners that his company’s distribution model will not change. In fact, he says Cox has no plans to change any of the company’s vision.

“RapidScale is a partner-focused company, and that will not change,” Jeter said. “They are going to double down on the channel. They are going to invest more in the channel. And ultimately they believe the channel is the distribution arm for IT technology of the future.”

Fierce Telecom says this marks an entrance in to the SD-WAN space for Cox. RapidScale partnered with Citrix to launch an SD-WAN offering last year.

We first reported on the story on Thursday, and RapidScale’s Brian Leonard sat down for our podcast to talk about the transaction..