Rackspace Gives Cloud Elite Some Competition

By Dennis Barker

October 24, 2008

Rackspace Hosting took to a stage in Austin, Texas, earlier this week to announce its new cloud computing initiative. The stage normally is used for “Austin City Limits” concerts — a good fit if you consider that Rackspace wants to do for cloud computing what “Austin City Limits” did for certain types of Texas music: make it accessible to a much bigger audience.

Among the top managed services providers in the world (about 40,000 servers worldwide), Rackspace says it intends to use its capacity, expertise, experience and support to bring the benefits of cloud computing to virtually all. In fact, in its official announcement, company CEO Lanham Napier promises “simple, cost-effective products that everyone can use.”

CTO John Engates says the new strategy will give a broader class of customers the ability to achieve a nimble, scalable infrastructure that matches IT expenditures to revenues. “When we first saw the Amazon cloud, we thought they had a solid offering, but it didn’t strike us that it was as powerful as the cloud could be,” Engates says. “We started investing in our own cloud, working on it the past two years, and now we’re ready to take that power and make it accessible to businesses and even individuals. Most businesses we talk to tell us they’re not using the cloud because they don’t know how to use it. With the three new services we’re now offering, we’re going to make the cloud easier to use, and for a broader range of applications.”

The company will have competitors in Amazon, Google and Microsoft, among others, but Tier1 Research analyst Daniel Golding thinks Rackspace has several advantages. “Amazon sells books, Microsoft sells software, Google sells ads. Rackspace is a customer service company, combined with a good set of products and services,” he explains. “These other companies do other things; hosting is what Rackspace does. It could have a very outsized impact on the market.”

Furthermore, “Rackspace gets it in terms of cloud computing,” Golding says. “There are a bunch of ingredients you need, and they understand that. You need an easy on-ramp and fast provisioning and storage on demand. All of Rackspace’s services are available on demand, rapidly provisioned and ultrafast.”

The Power of Three

Rackspace is now offering three cloud services, all of which fall under its cloud hosting division, Mosso. Cloud Sites used to be The Hosting Cloud, Mosso’s original cloud. “This is our platform for sites that need to handle huge traffic spikes on demand. It’s where you’d put your Web site that needs to scale,” Engates says. “We’ve tried to make cloud technologies accessible and simplified for this type of customer. Cloud Sites is very simple to navigate, very straightforward to use.”

Cloud Servers provides hosting for a more technically advanced crowd that needs “high-performance server capacity on demand,” Engates says. To offer this type of service, the company has acquired Slicehost, “a leader in Xen-based virtual machine hosting with datacenters globally and very experienced meeting the requirements of big business.” Slicehost’s development team brings expertise that will let Rackspace offer new types of cloud capabilities throughout its portfolio, he says.

Then there is what you might call Rackspace’s version of Amazon S3. Cloud Files is built on the company’s CloudFS Internet storage service, but with advances by way of Rackspace’s acquisition of Jungle Disk. Jungle Disk provides an easy-to-use online file storage service that uses S3 as its backend but will be ported to Rackspace and support both clouds. “You can store a lot of data in the cloud very inexpensively, but the trouble is the cloud can be technically difficult to use,” explains Engates. “Jungle Disk makes it easy to set up an online backup solution with virtually unlimited drive capacity. You can drop files into a virtual folder and they magically replicate in the cloud.”

“Cloud Files will give customers instant access to enterprise-class storage, scalable storage, at massive scale, without investing in infrastructure. We offer an industry-leading service level agreement, and our pricing model is very competitive. Replicated storage starts at about 15 cents a gigabyte.

Later this year, developers will be able to blast Cloud Files content “to millions of end users around the world” via Rackspace’s new partnership with Limelight Networks, a leader in content delivery systems. “You’ll be able to share files publicly through Limelight’s technology. Essentially, we’re putting a strong content delivery network on top of our cloud,” says Engates.

Rackspace also announced a deal with Sonian Networks to port its cloud-based mail-archiving program to Rackspace’s cloud, and Sonian will provide archiving for users of Rackspace’s Mailtrust e-mail hosting solution.

However, despite the myriad announcements, Rackspace is not going all cloud all the time. “By integrating our cloud with traditional managed hosting, we want to enable that mix that needs to happen,” Engates says. “You will always have those applications that best run in the cloud and those that run out of the cloud.”

Customers in the Clouds

Expand your products and you can expand your customer base, especially when back it up with service. “We do managed hosting for 15,000 customers, and many of them run very public sites, the kind of sites that get a black eye if they go down,” Engates says, citing Marines.com as one he can mention. “We want to bring that level of customer service to the cloud. With these new offerings and acquisitions, we expect to open cloud computing to not just more businesses, but different types of businesses and users.”

He believes enterprises eventually will come around to hosting mission-critical applications in the cloud, and there always will be start-ups. As points out, YouTube built its business at Rackspace before being acquired by Google, and there are thousands of small businesses that do not want to manage their Web site and e-mail in-house.

“As we move even further into the cloud, we’ll attract more developers, some advanced hobbyists, and the lone tech guy in the Fortune 500 company who wants to do a pilot project and can’t get the servers he needs because of budget cuts and red tape. We bring the costs down significantly, with no burdensome contract terms,” Engates says.

“Now with the addition of Jungle Disk and simple, scalable cloud storage,” he adds “we hit smaller businesses, and even the consumer market.”

However, not everyone can take advantage of the new offerings, particularly users with high-performance or extreme applications. “We’ve talked to folks in financial services, pharma, oil and gas, scientific research, and they’re interested in the benefits of a cloud infrastructure,” Engates says, “but Cloud Servers is not yet geared toward their needs. It wasn’t designed for HPC.” Rackspace does expect the Slicehost technology to extend to a broader audience, though, and its ability to provision a VM in just minutes should appeal to companies that do not want a permanent grid but do occasionally need a couple hundred servers. “The cloud will be a great place to do that, and that’s part of our roadmap,” Engates says.

Rackspace’s biggest task in meeting its cloud objectives will be “getting the word out,” Tier1’s Golding says. “Educating IT buyers that they have another option is a big challenge, especially when no one really knows what cloud computing is. It’s amorphous. People are doing lots of hand-waving and not getting down to brass tacks. Rackspace is good at having products you can actually use. And, more significantly, their services are available on demand, pay as you go.”

That could be the ticket. “At the end of the day,” Golding says, “even if you work for a large IT company, if you’ve been tasked to find a solution, you’re more likely to use the one where you can just put your credit card down.”

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