(FORTUNE Magazine) – Netscape wonderboy Marc Andreessen's latest project, Loudcloud, has a lot of people talking--mostly because the company is planning an IPO in the next several months. These days IPOs attract buzz (for different reasons than before): As the markets wobble, fewer companies venture into the public markets. But Loudcloud's offering seems especially brazen. Announced barely a year after Andreessen founded the company, the timing is like something out of 1998.

People like to gossip about Loudcloud because its founder is famous. But the company's business is also big news. Loudcloud is an Internet outsourcer, meaning it manages the computers that run its clients' Websites. CIOs love outsourcers because they can free up staff to work on core projects--instead of babysitting the messy Web stuff that lies underneath.

To meet that demand, a lot of companies like Loudcloud are moving into Internet outsourcing these days, offering overlapping sets of services. For now there's plenty of work to go around, which bodes well for Loudcloud's IPO. But many believe a wave of consolidation is inevitable.

There are literally thousands of Internet outsourcers right now, a veritable alphabet soup for the Net. The most recognizable are the applications service providers (ASPs), like USinternetworking and Corio.

They rent out applications rather than infrastructure--but they still get thrown in the mix. Loudcloud and fellow newcomers MimEcom and Logictier are called MSPs, which stands for managed service providers. They offer manpower and proprietary software to keep Websites glitch-free. Companies like StorageNetworks and StorageWay are SSPs--storage service providers. Even good old ISPs say they're in the game. "I can't tell you how many kinds of SPs there are," muses Mark Stone, CEO of Palo Alto-based Narus, which builds communications software for service firms. "You might eventually see things like CASPs--that's c for communications. Or EASPs--that's e for e-business."

The name game can seem silly, but it's a sign that segmentation is afoot. Companies use the new acronyms to emphasize that they're specialized, earning them higher margins and making them more attractive to Wall Street. To a certain extent the infrastructure outfits are trying to differentiate themselves from pure ASPs, whose stocks have gotten clobbered this year.

If the optimism about MSPs like Loudcloud is any indication, that differentiation seems to be generating some excitement from investors. But as some firms try to raise themselves above the crowd, other players are moving in. Their take: Forget specialization. Do whatever is necessary to remain the customer's primary point of contact.

Exodus Communications of Santa Clara, Calif., for example, rents space to firms like Loudcloud, which manage customers' sites. But increasingly Exodus is taking care of some of the managing function itself. "MSPs are a partner in some sense," says Exodus CEO Ellen Hancock. "In other cases we want the customer for ourselves. We'd like to maintain control over the customer relationships." Says Clare Gillan, an analyst with International Data Corp.: "You'll see more crossover in the future--ISPs offering hosting, hosting companies offering managed services, and so on."

In part that will come from consolidation, and the feeding frenzy is already under way. Metromedia Fiber Network announced it would buy MSP SiteSmith for $1.4 billion in October. In September, WorldCom bought Intermedia for $6 billion--reportedly for its 55% stake in hosting company Digex. Also in September, Exodus forked over $6.5 billion for hosting company Global Center.

That's why regardless of what happens with Loudcloud's IPO, Andreessen will do well to keep an eye on the big guys.