Rackspace Manages 100 AWS Customers, Scaling Back Own Cloud

Taylor Rhodes
Taylor Rhodes

Rackspace's transformation into an MSP for Amazon Web Services (AWS) and Microsoft Azure cloud services is showing progress. Indeed, Rackspace is now managing roughly 100 customers in Amazon's cloud, and one of the deals should be a six-figure per month enterprise engagement. Amid that reality, Rackspace is shifting resources off of its own OpenStack public cloud, and continuing to bet more heavily on managed services for AWS, Microsoft Azure and OpenStack private clouds.

Rackspace CEO Taylor Rhodes described the AWS momentum during the company's Feb. 16 earnings call. Rackspace has quickly built the Amazon customer momentum ever since it launched AWS management services in October 2015, the company said. The majority of those 100 AWS customers are new customers. The company intends to upsell and cross sell customers with managed security, private cloud and data services.

"Our top priority is to lead the AWS managed service provider ecosystem, letting AWS provide the economies of scale on its infrastructure, while we provide valuable economies of expertise," Rhodes said. "In recent years, more of these incremental workloads have gone to AWS, contributing to our slowdown in growth. Now we're seeing encouraging signs that our multi-cloud portfolio can reignite that essential part of our growth engine."

Staffing Up for AWS...

More than 70% of Rackspace's AWS customers are choosing Rackspace's highest service level, dubbed Aviator. "This trend indicates that we're adding significant value on top of the AWS infrastructure," he said. "We add that value in two ways: Through the proprietary software tools that we've created to make the platform easier to use; and through the specialized expertise that we've built among our cloud engineers."

To build on the Amazon momentum, Rackspace team members have earned more than 230 AWS technical certifications and more than 1,100 business and technical accreditations on AWS. The company also is an AWS DevOps Competency partner.

True believers in the strategy include Razorfish, which depends on Rackspace to manage the company's Amazon workloads.

...And Staffing Down Rackspace Public Cloud?

Rackspace's public cloud -- built on OpenStack -- continues to grow but more and more workloads are heading towards AWS and Azure, the company conceded. Amid that reality the company is "shifting engineering and marketing resources from our OpenStack public clouds to our new offers, including our OpenStack private cloud, which is growing in the high-double digits."

The strategy sounds promising -- but Rackspace still faces plenty of challenges. The company delivered Solid Q4 2015 results, but a 2016 financial forecast disappointed Wall Street. Indeed, Rackspace's growth in the AWS and Azure worlds isn't happening fast enough, apparently, to offset the challenges in the company's own cloud business.

Rackspace Isn't Alone

Numerous telcos and MSPs are sorting out their managed services strategies for Azure and AWS at the momentum. Aldridge recently acquired two Seattle-area MSPs -- one of which, Arterian, will focus on an Azure-centric cloud strategy.

And big telcos like Verizon are shutting down some cloud services, considering some data center sales, and preparing potentially deeper partnerships with Google Cloud Platform, Amazon and/or Microsoft.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.