Rackspace ramps up managed cloud services as IaaS competition starts to bite

New managed cloud models, service-level agreements and pricing are Rackspace's way of saying if you want cheap, commodity cloud, look elsewhere.
Written by Toby Wolpe, Contributor
Rackspace is tightening its focus on managed cloud services. Image: Shutterstock

In the face of blistering price competition from Amazon, Microsoft and Google for commodity infrastructure as a service, web-hosting firm Rackspace is tightening its focus on managed cloud services.

The company — based in San Antonio, Texas — today announced two managed-service levels for all its offerings, revamped service-level agreements and pricing, together with a developer+ scheme to attract startups and individuals testing new apps.

"Everything we do is going to be managed. Everything going forward that we're going to offer is going to have managed services associated with it. There will be no unmanaged Rackspace cloud. We're not in the commodity cloud business," said Rackspace chief technology officer John Engates.

The first of the two managed service levels is Managed Infrastructure, which comes with access 24/7 to architecture advisers, security guidance, and help with software development and cloud service launches.

Managed Operations is the second and higher level, offering dedicated account management, 24/7 availability monitoring and response, along with OS and application management.

Gartner research director Tiny Haynes said Rackspace's managed-cloud announcement is the company's way of responding to the major providers of infrastructure as a service.

"In straightforward standalone, commoditised infrastructure as a service, it is very much a game of Microsoft, AWS [Amazon Web Services] and to a certain extent Google," Haynes said.

"The rest of the guys — this is probably one of the reasons why we are looking at this whole managed cloud service — they can't really compete on the sheer economies of scale that Google and AWS can bring to the marketplace. They have to differentiate a bit further with actual managed services."

Haynes said the sheer scale of the deals being signed by Amazon is having a widespread effect on the market

"There are huge deals coming out of Amazon. There are a lot of organisations that are spending more than $25m with them per year — and they are not just the dot-coms. There are some big corporates there as well," he said.

"So it's pushing ripples around the marketplace and really the best way of differentiating is to put a managed service on top."

Rackspace CTO John Engates said every account will come with Managed Infrastructure as the default. The higher-level Managed Operations with more support and services then divides into two approaches to reflect the type of applications the customer is running.

"There are kind of two flavours of applications: the ones that were built before the cloud in a traditional architecture and the ones that were built in the modern architecture," he said.

"The way that we address those is with the sys admin-focused approach or the DevOps automation focused approach."

In the sys-admin approach, Rackspace logs into a customer's servers to manage them, while the Rackspace DevOps Automation Service manages the client's infrastructure as code for faster deployments and more efficient operations.

Engates said Rackspace is backing those services with significant service-level guarantees.

"Every SLA needs some teeth to make sure customers have a recourse if we should fail. So we're raising the bar on ourselves in terms of the new SLAs," he said.

Gartner's Haynes said Rackspace has traditionally had very strong SLAs and penalty schemes, and the changes should make them even more attractive.

"What you're saying to the marketplace is we're so confident behind our platform and availability and credibility that we'll give you multipliers back of your monthly spend. It does mean there's a lot more assurance and certainty behind the cloud platform," he said.

According to Rackspace's Engates, developer+ is aimed at startups and individual developers testing new applications but unprepared to commit to managed services, which may not yet be needed.

"Essentially, it's for somebody who's learning or trying things out for the first time on Rackspace. We didn't want to scare off that developer by saying you must buy managed services," Engates said.

"We are a managed-cloud company but we didn't want people to believe there was no way to try us out without a managed-services arrangement."

Developer+ is a package of 12 months' free cloud, with sufficient compute and storage resources, load balancing, networking and DNS to launch simple, small-scale applications.

Companies that have already been buying managed cloud services from Rackspace can continue with their existing arrangements or move to the new models.

Engates said the new services are designed to appeal to all types of organisations with varying degrees of cloud expertise. However, those with significant operations teams that are well versed in cloud computing may not opt for Rackspace's managed services.

"They'll go to Amazon, or they'll go to Google or they'll go somewhere else. In some ways we're trying to use this new pricing model and new structure and branding and everything that we're doing really to signal what business we're in," he said.

"It's a bold statement to say, 'All we do is manage cloud'. That's going to sort the market for us and say, 'If you're looking for the lowest possible commodity infrastructure pricing and you don't care about service, you don't care about expertise and you don't care about anything that Rackspace brings, then you're probably not a good fit for Rackspace'."

Engates said Rackspace will probably not appeal to those kinds of companies because they will always find reasons to be unhappy with the service.

"It's really no different to retail. There are discount companies that do retail and there are higher-end companies that offer a different kind of experience. Different people need different kinds of experiences in that market and the same probably applies in cloud."

The Managed Infrastructure service level costs $0.005/GB RAM per hour, with a $50 per month minimum, plus standard infrastructure rates. Managed Operations costs $0.02/GB RAM per hour, with a $500 monthly minimum, and standard infrastructure rates.

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