Opsware

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Type: Public Company
Address: 599 N. Mathilda Avenue, Sunnyvale, California 94085, U.S.A.
Telephone: (408) 744-7300
Fax: (408) 744-7379
Web: http://www.opsware.com
Employees: 368
Sales: $56.0 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: LDCL
Incorporated: 1999 as Loudcloud, Inc.
NAIC: 511210 Software Publishers

For approximately two and one-half years, from early 2000 through mid-2002, Opsware Inc., formerly Loudcloud, provided a hosted software solution to companies engaged in electronic commerce. The company's hosted software service featured its proprietary technology, Opsware, which was unavailable as a separate software product. Opsware's most notable feature is its ability to automate many of the manual tasks associated with web site maintenance and management. In June 2002 the company announced that it was selling its hosting and managed services business to EDS for $63.5 million in cash. The sale provided the company, which officially changed its name to Opsware, Inc. in late summer 2002, with much needed cash and enables the company to focus on developing and selling enterprise-level software for electronic commerce.

The formation of Loudcloud, Inc. was announced in September 1999. The company's founders included some of the Internet's best-known innovators, including Netscape Communications Corporation cofounder Marc Andreessen and former Netscape and America Online (AOL) executive Ben Horowitz. At AOL Horowitz was the executive in charge of the company's e-commerce platform division and oversaw the development of Shop@AOL, the Internet's largest shopping destination. Loudcloud's other cofounders were Tim Howes, co-inventor of the Lightweight Directory Access Protocol (LDAP), which became the Internet standard for directories, and Sik Rhee, designer of the Kiva application server. All four cofounders worked together at Netscape and then at AOL after Netscape was acquired by AOL and Sun Microsystems.

Details about Loudcloud's products and services were not made public until February 2000. At the industry conference Demo 2000, the company announced that it would offer a packaged solution to help companies put up speedy and reliable Internet sites primarily for business-to-business e-commerce. Loudcloud's service combined hosting, storage, hardware, and software development into a single package. It utilized the company's proprietary software, known as Opsware, to automate the configuration, bandwidth provisioning, and other tasks required to configure and manage a web site. Loudcloud claimed that Opsware provided unprecedented levels of scalability and reliability. The company's service was offered as a package, and its software was not sold separately.

Loudcloud began business with seven customers and $68 million in venture capital funding from Benchmark Capital and Morgan Stanley Dean Witter. Its initial group of customers included HomeGain, Skills Village, Acteva Inc., Wish.com, CFOWeb, Dreamlot, and Catapulse. At first, the company's target market consisted of dot-com companies that had already received venture capital funding, but Loudcloud soon added more substantial enterprises to its customer list.

Loudcloud's management team consisted of Marc Andreessen as chairman, Ben Horowitz as CEO, Tim Howes as chief technology officer (CTO), and Sik Rhee as vice-president of research. Under a strategic partnership with Hewlett-Packard (HP), the two companies would work together to develop systems and processes to deliver portals and web sites for dot-com companies, with HP providing Intel-based NT and Linux servers. Similar partnerships were announced with Sun Microsystems, EMC, Oracle, and iPlanet. Loudcloud's initial hosting partners were GlobalCenter Inc. and Exodus Communications Inc.

In May 2000 the company launched myLoudcloud, a portal that offered customized services for Loudcloud customers. The site made it easy for client companies to obtain performance statistics about their sites, including number of impressions and unique visitors to their sites. After moving into a 75,000-plus-square-foot building--more than five times its previous space--in June, Loudcloud announced in July that it had received an additional $120 million in venture capital financing from a group of investors led by Capital Research and Management. Loudcloud's staff had grown to 250 employees, and the company had more than 20 customers. That same month, when Microsoft announced its new Microsoft.Net strategy, it was noted that Loudcloud was included on the team that would help Microsoft pursue its Internet strategy.

Loudcloud added an Internet services portal to its home page in August 2000. The eServices Directory, as it was called, was open to the public and provided a guide to the various Internet services offered by Loudcloud as well as a directory of the company's strategic partners. It also included a list of companies that Loudcloud endorsed, either because they used Loudcloud products and services or they warranted a "best practices" rating.

Toward the end of 2000 Loudcloud introduced two new services aimed at growing customer segments. Instant ASP, aimed at Loudcloud's growing base of ASP (application service provider) customers, was a package of billing, scheduling, and failover services. For customers whose e-commerce business was rapidly expanding, Loudcloud offered the Global Connect service, which included load balancing and disaster recovery. As Loudcloud celebrated its first anniversary in September 2000, its list of customers had grown to about 30 and included Nike Corp., Britannica.com Inc., and Interelate Inc. The company's staff had grown to 370 employees. The company also announced that it was expanding internationally, opening offices in London, Paris, and Munich, Germany. Perhaps more significant, Loudcloud filed papers with the Securities and Exchange Commission (SEC) for its initial public offering (IPO).

Loudcloud introduced some software and service upgrades at the beginning of 2001. They included Global Response Smart Cloud, a service enhancement that allowed customers to measure and compare the real-time response rates of their sites with their competition. In February the company introduced Opsware 2.0, an upgrade that included new tools for content deployment, disaster recovery, and operations auditing. Loudcloud also announced a partnership with America Online to host and manage AOL's merchant e-commerce services, including its QuickCheckout wallet technology.

Loudcloud held its IPO on March 9, 2001. The unfavorable investment climate for Internet companies caused the company to reduce its proposed offering. Initially, the company planned to offer ten million shares, then 10 percent of the company, at $10 to $12 a share, giving Loudcloud a market value of about $1.1 billion. By February the company said it would offer 20 million shares, or 30 percent of the company, at $8 to $10 a share, giving Loudcloud a market value of only $600 million. Then, just before the IPO, Loudcloud priced its shares at $6 and offered 25 million shares, raising $150 million for the company. Investors were wary of Internet companies that had yet to turn a profit, and Loudcloud posted an operating loss of $164.8 million on revenue of $15.5 million for its fiscal year ending January 31, 2001. As a result of the IPO, Andreessen's stake in Loudcloud was reduced from 18 percent to 12 percent.

As part of an effort to attract larger enterprises, especially those with in-house corporate data centers that were operated without the help of a third-party co-location facility, Loudcloud introduced Opsware 2i, a subscription-based service that would plug customers and their web site operations into Loudcloud's Network Operations Center. Opsware 2i marked the first time that Loudcloud offered its services to a corporate in-house data center. To better serve enterprise customers, Loudcloud later in the year unbundled its managed service offerings to allow customers the option of purchasing only one of its application-management services or to mix and match them.

Loudcloud's financial problems continued to mount during the rest of 2001. In May the company laid off 19 percent of its staff, or 133 workers. It was an attempt to cut costs in the face of declining demand. By June Loudcloud's stock was trading around $2.50 a share, less than half of its offering price. Its stock fell another 25 percent to below $2 a share, when the company reported a wider-than-expected net loss of $60.3 million on revenue of $11.7 million for the quarter ending April 30, 2001. During the quarter Loudcloud gained $42 million in contracts from Ford Motor Co., Network Appliance, and USA Today. The company said its $205 million in cash was enough to fund its business plan. Losses for the next quarter, however, reached $76 million on revenue of $14.1 million, including a $30.2 million restructuring charge.

A five-year partnership with Qwest Communications International that was announced in September 2001 helped validate Loudcloud and boost its stock price 42 percent in one day. The partnership gave Loudcloud access to Qwest's sales force as well as to its infrastructure and data center space. Under the partnership Qwest would leverage its existing data center and bandwidth assets and use Loudcloud's managed services expertise to offer enterprise customers a managed solution. In addition, Loudcloud would manage Qwest.com, the company's corporate Internet site.

Loudcloud gained another important customer in November 2001 when it won the contract to design, host, and manage the British government's public portal UK Online (www.ukonline .gov.uk). Loudcloud won the contract when British Telecom, the site's former manager, was forced to re-bid for the contract after the original one expired.

New and existing customers provided Loudcloud with enough orders during the quarter ending October 31, 2001, for the company to post a significant gain in revenue while reducing its losses. For the quarter Loudcloud reported revenue of $14.3 million and a loss of $40.7 million, compared with revenue of $4.6 million and a loss of $58.2 million for the same quarter in 2000.

During the first half of 2002 Loudcloud introduced new services to improve customer relations, upgraded its customer management portal, and released Managed Services 3.0. An upgraded version of its Code Deployment System made it easier for customers to manage web site changes and included stronger security and on-demand backup features. Among the new features added to its customer management portal--where customers could manage, report on, and change their web infrastructure--was the ability to break out costs by business units. The company also reduced the base price of Managed Services 3.0, which included deployment and launch services, application and infrastructure services, and client services, to $10,000 per month. Among the new features found in Managed Services 3.0, which automated manual functions associated with web site maintenance, was a Patch Management System that automatically detected and deployed security patches. The software also automated a 40-point security inspection.

In June 2002 Loudcloud announced that it would sell its core managed services and hosting business to EDS for $63.5 million in cash. In addition, EDS agreed to pay Loudcloud $52 million over the next three years to license the company's software for its own managed hosting operations. The sale also included Loudcloud's customer base of about 50 web hosting clients.

The sale of its hosting business marked a significant change in Loudcloud's business model. Instead of providing and hosting electronic commerce software solutions, the company would focus exclusively on developing and selling software to corporate customers. As part of the change, the company adopted the name Opsware, Inc. later in the year, in order to more closely identify itself with the name of its flagship software product. The company announced that it would immediately launch an enterprise version of Opsware 3.0, which was previously available only as a hosted service.

Principal Competitors

International Business Machines Corporation; NOCpulse Inc.; Changepoint Corporation; Evolve Software, Inc.; Niku Corporation.

Further Reading

"Andreessen Is Ready to Host," PC Week, February 28, 2000, p. 39.

"Andreessen Launches Loudcloud," Business Journal, February 11, 2000, p. 30.

Braunschweig, Carolina, "VCs Rain $120M Down on Loudcloud," Private Equity Week, July 3, 2000, p. 3.

Burt, Jeffrey, "Service Gauges Response Rates," eWeek, January 15, 2001, p. 39.

"The Cabinet Office," Marketing, November 22, 2001, p. 11.

"Cloudy Day at Loudcloud," San Francisco Business Times, May 4, 2001, p. 58.

Cohen, David, "Andreessen Plays Host to New Era in Web Site Management," New Media Age, May 31, 2001, p. 44.

Corcoran, Elizabeth, "Growing Up Is Hard to Do," Forbes, April 29, 2002, p. 36.

Darrow, Barbara, and Amy Rogers, "Loudcloud--The Secret Is Out--Goal: Become Infrastructure Provider to B2B Stars," Computer Reseller News, February 7, 2000, p. 7.

Doyle, Eric, "Loudcloud Adds Automatic Protection for E-Business," Computer Weekly, June 6, 2002, p. 34.

Fonseca, Brian, "Loudcloud Makes MSP Bid for Enterprise-Class Customers," InfoWorld, April 23, 2001, p. 24.

------, "MSPs Forge Software Trail," InfoWorld, June 24, 2002, p. 41.

------, "MSPs Stress Customer Needs," InfoWorld, January 21, 2002, p. 24.

Gilbert, Alorie, "Loudcloud Sees Better Days Ahead," InformationWeek, September 3, 2001, p. 26.

Gillmor, Dan, "Foe? Partner? No Big Deal; It's Just Business," Computerworld, July 10, 2000, p. 26.

Graebner, Lynn, "Loudcloud Increases Space by Factor of Five with Move," Business Journal, June 9, 2000, p. 4.

Greenemeier, Larry, "Loudcloud Has a Stormy Quarter," InformationWeek, June 18, 2001, p. 36.

Holland, Roberta, "Loudcloud Portal Clears Up Site Stats," PC Week, May 8, 2000, p. 56.

"HP and Loudcloud Partner to Provide Software Services to Internet Businesses," EDP Weekly's IT Monitor, February 14, 2000, p. 7.

Koblentz, Evan, "Host with the Most," eWeek, September 18, 2000, p. 18.

------, "Loudcloud Portal Opens Up Expertise," eWeek, August 14, 2000, p. 38.

------, "Opsware 2.0 Speeds Code Deployment," eWeek, February 19, 2001, p. 44.

"Loudcloud, AOL Partner," eWeek, March 5, 2001, p. 3.

"Loudcloud Issues IPO," InfoWorld, March 12, 2001, p. 5.

"Loudcloud Makes Stand-Alone Opsware Tools Available," InternetWeek, June 26, 2002.

"Loudcloud Stock Drops Under $2 Marker," IPO Reporter, June 25, 2001.

"Loudcloud Updates Customer Management Portal," InternetWeek, April 3, 2002.

"Marc Andreessen's New Company," Content Factory, October 27, 1999.

Mardesich, Jodi, "Andreessen Starts It Up," Fortune, November 22, 1999, p. 51.

Moozakis, Chuck, "Platforms Centralize Mgm't of Hosted Apps," InternetWeek, February 14, 2000, p. 10.

Musero, Frank, "The Unlucky Seven: New Issue Busts of 2001," IPO Reporter, June 18, 2001.

Nelson, Matthew G., "Loudcloud Looks to IPO for Sunnier Skies," InformationWeek, October 9, 2000, p. 18.

O'Connor, Colleen, "IPOs Show Signs of Life, But Still Weak," IPO Reporter, March 12, 2001.

------, "Loudcloud Rains on Late-Stage Buyers, But IPO Shines on Initial VC Supporters," Private Equity Week, March 19, 2001, p. 11.

Opsware, Inc., "Founders Story," July 3, 2002, http://www.opsware .com.

"A Pioneer Once More," Business Week, February 28, 2000, p. 41.

"The Poster-Child Who Grew Up," Economist (U.S.), March 9, 2002.

"Qwest Validates Loudcloud's Viability," Telephony, September 3, 2001, p. 14.

Regan, Keith, "Loudcloud Sells Hosting Biz to EDS for $63.5M," E-Commerce Times, June 17, 2002, http://www.ecommerce times.com.

Roberts-Witt, Sarah L., "Loudcloud," Internet World, July 1, 2000, p. 54.

Rogers, Amy, "Loudcloud's New Services Target ASPs, E-Business," TechWeb, September 15, 2000.

Rogers, Amy, and Barbara Darrow, "Start-Ups Have Heads in Loudcloud," Computer Reseller News, February 21, 2000, p. 41.

Rogers, James, "Loudcloud to Host UK Online," Computer Weekly, November 22, 2001, p. 6.

Sliwa, Carol, "Andreessen Targets Web Outsource Model," Computerworld, September 25, 2000, p. 32.

Smetannikov, Max, "Loudcloud: Coming Out with a Whimper," Interactive Week, March 12, 2001, p. 20.

Smith, Tom, "EDS Buys Loudcloud Hosting Business for $63.5 Million," InternetWeek, June 17, 2002.

------, "Latest Loudcloud Service Starts at $10,000 Per Month," InternetWeek, May 8, 2002.

"These Days, Even Stars Can Fizzle on the Launchpad," Business Week, March 5, 2001, p. 40.

Torode, Christina, "Loudcloud Gets a Lift," Computer Reseller News, November 26, 2001, p. 22.

------, "Loudcloud Unbundles Managed Services Offerings," Computer Reseller News, August 13, 2001, p. 10.

Vijayan, Jaikumar, "Loudcloud Expands Outsourcing Services," Computerworld, April 23, 2001, p. 25.

— David P. Bianco

Opsware Inc.

Type	Now owned by Hewlett Packard
Founded	September, 1999 (as Loudcloud, Inc.)
Key people	Marc Andreessen: Chairman and founder,[1] Ben Horowitz: CEO and founder,[1] Tim Howes: CTO and founder,[1] In Sik Rhee: COO and founder,[1] John O'Farrell: EVP
Products	IT Management Software
Website	HP Web site

Opsware, Inc. was a software company based in Sunnyvale, California that offered products for server and network device provisioning, configuration, and management targeted toward enterprise customers. Opsware had offices in New York City, Redmond, Washington, Cary, North Carolina, and an engineering office in Cluj, Romania.

In July 2007, HP announced that it had agreed to acquire Opsware for $1.6 billion in cash ($14.25 per share). The acquisition closed on September 21, 2007.^[2]

Contents 1 History 2 Products 3 Customers 4 References 5 External links

History

The company that was formerly known as Loudcloud was founded on September 9, 1999 (i.e., 9/9/99) by Marc Andreesen and Jim Clark as a managed services provider.^[3] The company was one of the first to offer Software as a Service computing with an Infrastructure as a Service model.^[4] According to Wired Magazine, LoudCloud was one of the first vendors to talk about cloud computing and Software as a Service.^[5]

After selling the operations side of the business to EDS in the summer of 2002, Loudcloud became Opsware and went to market as a technology company, offering the software that had been developed internally to support customer systems via automated server life-cycle management. In 2004, Opsware acquired asset management systems provider Tangram Enterprise Solutions,^[6] and in February 2005 acquired network device configuration management vendor Rendition Networks.^[7] In July 2006 Opsware acquired CreekPath for its Data Center Automation (DCA) product offering to add provisioning of storage components.^[8] In April 2007 Opsware acquired Seattle-based iConclude and its run-book automation software in order to integrate datacenter management from end-to-end.^[9]

In July 2007, HP announced that it had agreed to acquire Opsware for $1.6 billion in cash ($14.25 per share), sixteen times revenues. It was HP's third largest acquisition at the time behind Compaq and Mercury Interactive.^[10] HP now markets Opsware products and software as a service solutions within its HP Data Center Automation Center, as part of the HP Software Division.^[11]

Products

Opsware had three main systems that it marketed. The Server Automation System (SAS) was designed to provide provisioning, policy enforcement, compliance reporting, and patching of Windows, Unix and Linux servers across thousands of servers. It is now sold as HP Server Automation software.^[12] The Network Automation System (NAS) was designed to provide network device provisioning, policy enforcement, security lock-down, software management, and compliance reporting across thousands of devices from over 500 variants of device vendors, models, and OS versions. This product was also OEM'd by Cisco Systems and was called the Cisco "Network Compliance Manager" (NCM). It is now sold as HP Network Automation software.^[13] The third system marketed by Opsware was the Process Automation System (PAS), designed to provide run-book automation from former partner iConclude (who was acquired in March 2007). It is now sold as HP Operations Orchestration software.^[14]

Customers

Opsware customers included its now parent HP, GE, EDS (whose acquisition was completed by HP August 26, 2008,^[15] and is now called HP Enterprise Services^[16]), the Federal government of the United States and numerous Fortune 500 companies who used the software to automate their IT infrastructure.

References

1. ^ ^{a b c d} David Sheff (2000-08). "Crank it up". Wired Magazine. http://www.wired.com/wired/archive/8.08/loudcloud_pr.html. 
2. ^ HP Closes Opsware Acquisition news release
3. ^ "The Case for the Fat Start-Up." Wall St. Journal's All Things Digital: 3/17, Ben Horowitz.
4. ^ Computeractive.co.uk
5. ^ Wired Magazine. "Crank it up." David Sheff. 2000-08
6. ^ Business Wire. Opsware Inc. Completes Acquisition of Tangram Enterprise Solutions; Integration of Products Furthers Opsware's Lead in Automation and Utility Computing
7. ^ Business Wire. Opsware Completes Rendition Acquisition, Furthering Leadership in Rapidly Growing IT Automation Market. Retrieved 2010-02-27.
8. ^ Business Wire. Opsware Completes Acquisition of Creekpath Systems; Acquisition Provides Foundation Technology. Retrieved 2010-02-27.
9. ^ Northwest Innovation. iConclude Acquisition Completes. Retrieved 2010-02-27.
10. ^ China Martens, IDG News Service. HP Buying Opsware in $1.6 Billion Deal. PC World
11. ^ HP Data Center Automation Center product pages
12. ^ HP Website product pages
13. ^ HP Product Web page
14. ^ HP Product Web pages
15. ^ Stacey Higginbotham. GigaOM. HP Completes EDS Buy, Heads for the Clouds
16. ^ News Release. EDS, an HP Company, Becoming HP Enterprise Services

• Lawton, Christopher and Kingsbury, Kevin. "H-P Makes Move Into Data Centers", The Wall Street Journal, July 23, 2007. Accessed July 23, 2007.

External links

• HP IT Management Web site
• HP Software as a Service Web site

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