Rackspace Acquires JungleDisk, Slicehost To Take On Amazon Web Services

Web hosting provider Rackspace has acquired JungleDisk, an online backup service, and Virtual Machine provider Slicehost in a deal designed to help bolster its offerings against top competitor Amazon Web Services. The announced acquisition price is $11.5 million in cash and stock, with the possibility of up to an additional $16.5 million depending on performance.

Jungle Disk is a file storage and backup service that up until now has relied on Amazon’s Simple Storage Service (S3). With the new announcement the company says that it will begin offering the service using Rackspace’s similar service Cloud Files, but will continue to support storage using Amazon with plans to support even more services in the future.

Slicehost offers developers “slices” in Xen-based virtual servers that are much cheaper and generally easier to use than a traditional dedicated server. The service is a direct competitor to Amazon’s Elastic Compute Cloud (EC2).

As part of today’s annoucement Rackspace also announced a partnership with CDN Limelight Networks to help distribute data as part of its Cloud Files service, and an agreement with Sonian to offer archiving for its Mailtrust Email service.

The additions help strengthen Rackspace’s cloud based services, collectively called Mosso, which the company launched in February.

This is all good news for developers. Amazon has been the dominant force in this space for some time, and competition will only decrease prices and (hopefully) lead to an arms race in features, stability, and performance.

Disclosure: Rackspace is a TechCrunch advertiser.