Microsoft must buy Rackable!

Ashlee thinks so.

Under previous management, Rackable received and then turned down an acquisition offer from Dell. That was a huge mistake since Rackable's share price was almost triple its current level. In addition, Dell along with all of the major hardware makers have since moved on with their own cloud/utility computing designs. This leaves Rackable in an awkward position. Its natural acquirers have disappeared. It will need an unnatural act to strike it rich.

Rackable is expected to release new systems any day now, and our sources indicate that the hardware will put the stuff being pimped by the Tier 1s to shame. The Silicon Valley-based company offers the most energy efficient, balanced servers of anyone and has, by most accounts, the top data center in a container design, which should only improve with the new servers.

In addition, Rackable has always run on a build-to-order model. The company is flexible enough and smart enough to cater to a customer's individual needs, unlike the big boys which must make drastic compromises to serve as broad a set of customers as possible.

So why not have Microsoft commit that unnatural act and buy the server house? Rackable's market capitalization stands at just $417m, as of this writing. Microsoft could afford to pay a 100 per cent premium and grab Rackable for $1bn. That's just two data centers' worth of money at the going $500m per center rate.

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What do I think?

This move will certainly align Microsoft's future plans of doing the Dual-Strategic Convergence and eventually using one of the two as a launchpad to the other. Confused?

OK here you go:

First part of the convergence its to align all its products such as SharePoint, Exchange into the new products such as Windows 7, Exchange 14, SharePoint, MDOP/MDEV and package them into a software assured model.

Second part of the convergence is to to the Microsoft's Web 2.0 strategy and bring these products as " Globally Deliverable" from high density VPCs (Virtual Private Clouds).

Then eventually launch these "web deliverable", SaaS optimized licensable services through the data centers. And what better way to do it than having Rackables in your house!

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