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Rackspace Fights Amazon With Managed Cloud Push

Cloud-services supplier changes direction in competition with Amazon and Microsoft. New "managed cloud" approach will charge for specialized services on top of infrastructure.

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Rackspace is falling back on its historic strength in managed hosting, introducing Tuesday what it calls a new category of cloud computing: managed cloud. A number of providers have been edging up to such a concept, including Verizon, CenturyLink, and Colt in Europe.

But Rackspace is taking the plunge and claiming leadership in managed cloud, which shifts more responsibility to Rackspace to guarantee the continued, at-scale operation of a customer workload. In contrast, at Amazon Web Services the customer can commission virtual servers, but their ongoing operation is the customer's responsibility.

Under Rackspace's new approach, "every customer gets a degree of managed cloud," where Rackspace is monitoring and, if necessary, scaling-up the workload, said Rackspace CTO John Engates in an interview before the announcement. That means current Rackspace public-cloud customers will gradually become managed-cloud customers, with baseline support guaranteed and various options for higher-level support available.

The bulk of Rackspace's business remains managed services, and those services will continue in close association with managed cloud. Rackspace will host Active Directory, Microsoft Exchange, or Sharepoint and ensure their operation for a given corporate client. Indeed, Gartner lists Rackspace as the leader in its Magic Quadrant for managed hosting in Europe, with Interoute, Colt, Verizon, CenturyLink, and BT Global Services close behind. IBM lags behind in Gartner's Challengers quadrant.

[Want to learn more about how Rackspace can help move customers toward DevOps? See Rackspace Touts Containers On Bare Metal Servers.]

Rackspace's public-cloud business is believed to have fallen on hard times as IBM started developing the enterprise market with its acquisition of SoftLayer, and Amazon Web Services, Google, and Microsoft began competing with more vigorous price cutting for the commodity cloud market. Investors believed Rackspace was caught between the two forces, with its promise of "fanatical support" failing to gain traction in either segment.

"We've been battling it out with the unmanaged cloud service group," Engates acknowledges. "There's a big gap in the market. There's another round of customers coming to cloud computing who need managed services."

John Engates, speaking at Interop 2012.
John Engates, speaking at Interop 2012.

Engates likens the state of the cloud market to early Linux adoption. The first adopters enjoyed downloading Linux source code, compiling it themselves, and using it to build applications. Then a much broader swath of customers developed for Linux who wanted someone else to put together all its components and give them a more finished, supported product.

Engates says both enterprise users and developers now coming to the cloud want some forms of managed services, such as database or middleware services and large-scale enterprise application services. For both groups, "we'll do more and be more proactive upfront to ensure customers' success in the cloud.

"Most cloud adoption is still ahead of us, not behind us. We have a great story to tell to someone who wants to adopt DevOps, hybrid cloud operations. Rackspace wants to makes its support expertise more generally available and use it as a differentiator in a commodity cloud market. A customer should be able to say of Rackspace technical support, 'I look at those guys as an extension of my IT team.' "

Rackspace will break out its cloud infrastructure pricing, which will continue to resemble Amazon, Microsoft, and Google infrastructure prices. But customers will add services that are separately priced. They'll self-provision servers and pay for them by the hour, as in a cloud model, but Rackspace will look over their shoulder and, for a fee, guarantee scaling and continued operation with higher-level SLAs than most cloud services are able to provide, according to Engates.

Rackspace routinely uses Chef and Puppet in its managed-services operation. If a managed-cloud customer wants the use of those configuration and management engines, then Rackspace will be able to oblige for a fee. At the same time, Rackspace will point out other possibilities to move toward a more DevOps-oriented style of operation and perhaps add more services as customers see dividends from sharing responsibility for workloads in the cloud.

Other cloud-service providers have also taken steps toward greater emphasis on managed services. CenturyLink, which acquired both Savvis and Tier 3 service providers, is converting former managed hosting services into its CenturyLink Cloud platform. It will integrate hosted systems such as Active Directory, Apache Server, Apache Tomcat, Microsoft Internet Information Services, Microsoft SQL Server, and MySQL as on-demand, billed-by-the-hour cloud services. It will also offer pre-configured Windows Servers and Red Hat Enterprise Linux Servers, ready for workload assignment, in its public cloud.

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Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive ... View Full Bio

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Muhammad Saad Khan
Muhammad Saad Khan,
User Rank: Apprentice
7/21/2014 | 6:13:01 AM
Re: Linux comparison
Rackspace prices are too hight for an average cloud user. As there are many companies coming up with DevOps mechanisms for a managed cloud like Cloudways, GetClouder, Jumpstarter.io. Which not only give access to cloud easily but their automated systems are able to manage the tasks that a 4 to 5 person team at managed service provider do. And off-course the prices are mostly starting from $5 with the choice of choosing multiple infrastructure providers. 

I think Rackspace needs to step out and get in contact with these companies to integrate their infrastructure too. This will help them scale fast without increasing the man power.
User Rank: Ninja
7/16/2014 | 10:53:59 AM
Rackspace was always a pretty expensive brand when I was dealing with hosting duties, but its customer service was always top notch. I'd imagine it has a solid shot of cornering the managed cloud market as I always found it very easy to pick up the phone and get in touch with a real person very quickly. 
Thomas Claburn
Thomas Claburn,
User Rank: Author
7/15/2014 | 4:31:37 PM
Re: Managed infrastructure, managed service priving
That's more than twice the hourly rate of Digital Ocean's 1GB server.
Charlie Babcock
Charlie Babcock,
User Rank: Author
7/15/2014 | 1:28:49 PM
Managed infrastructure, managed service priving
Rackspace pricing starts at $.032 per hour for a basic, 1 GB server with Raid 10 solid state disk storage. Managed infrastructure service adds a half cent per hour, with a $50 a month minimum, to that, while managed operations service adds $.02 per GB per hour, with a $500 a month minimum.
User Rank: Author
7/15/2014 | 1:14:09 PM
Linux comparison
The Linux analogy from Engates makes sense. Now the question is, will people pay enough for Rackspace to make a healthy business from managed cloud?
User Rank: Ninja
7/15/2014 | 12:24:24 PM
The evolution of Cloud
It makes sense to see cloud services evolving to more of a true managed service as the skillsets required to run these environments are often not available in many IT shops.  With the ability to offload the day to day management, and take advantage of additional services such as hosted storage it is a great option for organizations who want to simplify their IT.  Build in security and the ROI of cloud will continue to increase.
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