Rackspace’s big pivot pays off

Rackspace has transitioned from offering its own cloud to helping customers use Amazon and Microsoft’s cloud

After a tumultuous time period of executive transition, questions about whether the company would be taken private or sold, and debate about the future of its public cloud plans, managed hosting and cloud provider Rackspace made a big pivot last year.

The company has always prided itself on “Fanatical Support,” meaning that it will help customers use its infrastructure services. Last year it did what would have been unthinkable a couple of years ago though: It began offering that fanatical support for other cloud providers too.

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If you’re using Amazon Web Services – which was once Rackspace’s arch nemesis – then Rackers (Rackspace employees) will help you out; same with Microsoft Azure.

This week Rackspace announced its first quarter revenue of $518 million, up almost 8% from a year ago when support services for other cloud providers was not available. According to a research note by Technology Business Review, Rackspace officials said they support 400 paying customers who use Azure and AWS.

“While Rackspace’s core dedicated and managed hosting business remains key to the company’s success, Rackspace’s move to supporting leading cloud vendors and away from proprietary cloud offerings has allowed it to further promote its Fanatical Support services capabilities,” notes TBR research analyst Molly Gallaher Boddy. “These customers are looking for Rackspace’s high-touch Fanatical Support in managing their workloads, which have moved to AWS and Azure clouds, and Google Apps for Work.” And Rackspace rightly decided to support them, instead of block those customers.

Rackspace has also launched many new options for customers to use its OpenStack-based cloud. In addition to a managed cloud offerings based on OpenStack – meaning it is IaaS, with support bundled in – it also offers Rackspace Hosted Private Cloud, which is dedicated OpenStack resources for customers.

It seems that Rackspace’s mentality of ‘if you can’t beat them, join them’ is working just fine.

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Copyright © 2016 IDG Communications, Inc.

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