Forget the Rest, Rackspace is Amazon’s Only Cloud Threat

The mainstream cloud-computing market is becoming a two-horse race, with Rackspace gaining fast on Amazon Web Services, and leaving an idle Microsoft in the dust. AWS is by no means pulling up lame, but, as evidenced this week, Rackspace is gaining customers and adding features so fast it’s difficult to believe AWS will be able to fend it off forever.

Rackspace’s biggest victory came in the form of impressive third-quarter results – the company announced 17 percent year-over-year growth and more than 10,000 new customers since last quarter. Rackspace now has around 81,000 customers, almost 62,000 of which are labeled as cloud customers, and cloud revenue contributed $15.3 million to the company’s overall revenue of $147.1 million (if only Amazon would be so gracious as to separate cloud revenue from the rest). The resultant public-relations boost could not have come at a better time, as Rackspace is fresh off yet another power failure and subsequent outage at its Dallas-Fort Worth data center, this one affecting its cloud offerings for the first time. Wall Street, at least, is looking past the outage issues and suggesting the investors put some RAX in their portfolios.

Rackspace also defeated AWS in head-to-head battle, stealing blog platform Posterous away from S3 and adding it to the list of Cloud Files users. AWS might be able to boast that it houses 83 billion objects in S3, but it very publicly is no longer housing those objects for Posterous.

Rackspace trounced AWS on the feature front this week, too. Amazon announced a slew of new features, including SAS 70 Type II compliance and a software development kit for .NET, but Rackspace countered with Windows Server instances with full technical support from Microsoft. While AWS has offered Windows AMIs for a while now, it does not, to the best of my knowledge, offer vendor support for any third-party AMIs. When combined with Rackspace’s famed “fanatical support” and respected security and compliance practices, strong partner relationships like these constitute a significant departure from AWS’s staunch self-service business model. (Amazon did score a win with the announcement of its upcoming Asian data centers, though, as that is a market ripe for cloud adoption, and, in China, at least, Joyent is the only real public cloud provider.)

The company also seems to understand subtle marketing, as evidenced by its regular cloud-computing surveys and blog efforts. This week, Rackspace released results of its “No More Servers” survey, which, although questionable in name when compared to the results, nonetheless gives potential customers one more reason to associate Rackspace with cloud computing. It also made known its participation in, and analysis of, the white-hot NoSQL movement, which exposes Rackspace to a whole other class of users and even makes the company, which made made its name with old-school colocation and managed hosting, appear a member of the new web-centric crowd.

I’ve said in the past that if anyone can dethrone AWS, it’s Rackspace or Microsoft. Well, Microsoft’s Azure still is not publicly available, and Rackspace continues to make all the right moves in the meantime. When Werner Vogels looks over his shoulder now, he’s seeing Rackspace on his heels, with everybody else – even Microsoft – lagging far behind. Estimates and available statistics suggest AWS still has sizeable leads in customers and mindshare, but Rackspace, with its customer-friendly practices, is closing the gap.

Question of the week

What have been Rackspace’s best moves thus far to boost its cloud market share?
Relevant analyst in cloud computing
You must be logged in to post a comment.
3 Comments Subscribers to comment

Explore Related Topics

Latest Research

Latest Webinars

Want to conduct your own Webinar?
Learn More

Learn about our services or Contact us: Email / 800-906-8098