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Rackspace attempts to retool hosting into cloud

Rackspace doesn't have the cloud offerings or the budget, but claim transparency and service will aid them in Amazon fight.

LAS VEGAS -- Lew Moorman, the Chief Strategic Officer at Rackspace, which hosts cloud provider Mosso, says his company can compete effectively in the cloud computing marketplace despite a substantial handicap in infrastructure compared with Amazon.

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Cloud computing challenges

Rackspace is one of the largest hosting companies in the world, but it does not have the infrastructure in place to match Amazon's Elastic Compute Cloud (EC2) compute offerings or Google Apps' seamless application platform, and it's struggling to create competitive offerings in the newly emerging cloud infrastructure market. Currently Mosso offers server instances like EC2, but it lacks the application programming interface and flexibility in server images that make Amazon successful.

It also lacks the computing resources of Amazon; according to estimates, Amazon's deployed capacity at around 250,000 servers, although it is not known how much of that capacity is public cloud and how much is for retail operations. Rackspace has 50,000 servers, and while Moorman says Rackspace can't invest on the same scale, the company is large enough to see the same economies of scale. "We're a $500 million company; if we were $50 million, I'd be much more nervous," he said.

Unlike larger cloud providers, Rackspace is not building its own data centers but it is leasing or retrofitting available space, the latest scheduled to open July 2009 in Virginia. Moorman says they can increase capacity quickly and cheaply, since, "We're paying the same for servers as anyone else.". No matter what, Rackspace is well behind cloud leaders in spending: Amazon reportedly spent $86 million on infrastructure in 2008, and scientific grid provider Teragrid received $65 million in public grants to build data centers.

Trying to gain on EC2
Moorman claims that Mosso can profit in the near term by offering services and transparency that Amazon currently does not. "We're so used to serving customers that are risk averse, it's an advantage to us," Moorman said. "But I don't think it's a long-term advantage." He says Amazon "won't even tell you where" its servers host data. "I think that will change, or … they won't get enterprise business."

If cloud infrastructure moves toward being sold as a utility, service won't mean much.
But skeptics note that if cloud infrastructure – CPU time and storage – is moving toward being sold as a utility, service won't mean much. Alistair Croll, an analyst at Bitcurrent, compares this model to a phone company. "I don't care about the service unless my phone's on fire", he said. "It just has to work." Croll is also skeptical about Rackspace's ability to compete in capacity. "Each one of Google's data centers is more efficient than the last," he said, explaining that data centers are evolving into commodities themselves. He cited Microsoft's portable shipping containerized data centers as examples.

Croll said Rackspace's best bet is to draw on its roots as a service provider since it will not be able to compete in raw compute power. Moorman agrees, "It's about computing services for businesses" he said. "It's a new world, and there are new skills, but this is hosting." How fast Rackspace can retool to meet new-world demands remains to be seen.

Carl Brooks is the Technology Writer for Write to him at And check out our Troposphere blog.

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