The provider expands its cloud offerings with on-demand virtual machines running on dedicated hardware.Today Rackspace announced the availability of its Private Cloud offering, in which Rackspace manages a dedicated set of servers inside Rackspace data centers on behalf of customers. Customers use a portal to spin up and spin down VMware-based virtual machines on demand on top of the dedicated infrastructure.

The company says customers will pay an annual base price for the service depending on the hardware configurations, which begin at16Ghz of processing power and 32Mybtes of memory. Pricing starts at around $6,000 for a server environment that will support a minimum of eight virtual machines, as well as a dedicated firewall.

In addition to the base price, customers will also pay per VM on a consumption-based model. "A customer who had a batch job that ran on 5 VMs for the last week of the month, they only pay for the VMs at the time they used them," says John Engates, Rackspace CTO. The company will charge for VM use per day, rather than per hour in its public cloud option.

As mentioned, customers can manage the use of VMs through a private portal. "You can mix cloud and virtual assets. You can turn VMs on and off, make snapshots and clones, see if Vmotion has moved a VM," says Engates. Customers can also add other resources, such as physical servers to run databases.

With the dedicated cloud offering, companies can link their own data centers to the service via private connections or VPNs, enabling customers to spin up virtual capacity to meet increased workload demands, such as the back-to-school season for online retailers. Engates says the company also plans to enable customers to connect their dedicated Rackspace cloud with Rackspace's public cloud offering, but that's still a roadmap item.

Rackspace launched the dedicated option for customers that are uncomfortable with the multitenant model of the public cloud. In the public cloud service, customers can rent Xen-based VMs by the hour, but those VMs will run on hardware shared with other customers.

"For companies that have regulatory challenges or privacy issues or things that concern them, the public cloud isn't consistent with that," says Engates. "That's where private cloud shines."

Other service providers also hope to lure customers with this model. For instance, Savvis, Unisys and Terramark offer dedicated server hardware with a service layer that lets customers flip VMs on and off on demand.

In regard to supporting other hypervisors on its dedicated cloud platform, Rackspace says it doesn't have any immediate plans, though the company will keep an eye on adoption of Hyper-V.

I have one quibble with Rackspace's terminology. To my mind, a private cloud runs inside an enterprise data center and uses hypervisor technology to pool server resources. Rackspace's latest offering is, in my opinion, better described as a managed public cloud, or a dedicated cloud. This distinguishes it from a true public cloud, which is a multitenant architecture in which different customers run their own VMs on the same hardware.