News & Insights for the AI Journey|Sunday, December 15, 2019
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Rackspace Unveils ‘Managed Cloud’ Strategy 

Cloud services provider Rackspace is unveiling a "managed cloud" strategy built around new service levels and a pricing model aimed at businesses looking for single- or multi-tenant servers, or a combination of those platforms, through a hybrid model.

The new pricing model unveiled July 15 attempts to differentiate Rackspace from commodity cloud services providers like Amazon Web Services. It does so by breaking out prices for cloud infrastructure as separate from service and support costs. "This model allows customers to more accurately compare the true cost of cloud infrastructure from provider to provider," the San Antonio-based company said in a statement.

The new pricing model includes a "managed infrastructure service level" (hourly rate of $0.005 per GB of RAM, $50 monthly minimum) and a "managed operations service level" (hourly rate of $0.02 per GB of RAM, $500 monthly minimum).

The company also said its Performance Cloud Servers now start at 3.2 cents per hour for a server with 1 GB of memory.

The managed cloud strategy seeks to leverage Rackspace's core customer support and service capabilities. As cloud services become commoditized, Rackspace said it is shifting away from attempting to compete with AWS and other major suppliers in raw, self-service infrastructure to the managed cloud segment of the market.

"More customers are looking for a trusted partner with specialized expertise to help manage their cloud," Rackspace CEO Graham Weston asserted in a statement announcing the strategy. Weston claimed the new services levels would help customers eliminate the hassle of recruiting IT experts needed to manage complex cloud technologies.

The company's branded "Fanatical Support" strategy for managed infrastructure includes architecture engineers, security guidance, assistance with code development, launch assistance and round-the-clock access to cloud engineers.

Rackspace also unveiled a new developer program that provides "infrastructure credit" for a package of cloud services. The company said the intent is to free developers to focus engineering resources on applications rather than managing IT operations.

The moves come as embattled Rackspace looks to distance itself from the cutthroat commodity cloud business. Company co-founder Weston returned as chief executive earlier this year. In May, the company disclosed in a securities filing that it had retained investment banker Morgan Stanley to evaluate approaches from "multiple parties" expressing interest in strategic relationships ranging from partnerships to an acquisition.

The company did not address those issues in announcing its managed cloud strategy, but did acknowledge the need for differentiation as AWS, Google, and Microsoft engage in an unrelenting cloud price war.

"Recent price cuts by Google, Amazon, and Microsoft are helping to segment the cloud market in a way that makes clearer than ever the difference between unmanaged and managed cloud providers," Rackspace president Taylor Rhodes noted in a blog post.

Seeking to contrast Rackspace's managed approach with multi-tenant cloud hosts, Rhodes added, "We run each workload where it will achieve the highest performance, enhanced security, and cost efficiency — whether that’s on multi-tenant or single-tenant servers, on Linux or Windows, on OpenStack or VMware, in our data centers or those of the customer or a third party."

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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