How Rackspace is surviving the ultra-competitive cloud market

Dive Brief:

  • Rackspace CEO Taylor Rhodes says his company found better success in the cloud market once it decided to stop competing with Amazon Web Services and start helping customers use AWS instead, according to a recent interview in CIO.
  • In 2010, Rackspace built OpenStack, an open source IaaS public cloud service, but the company didn’t make much progress against AWS. 
  • "It’s very clear that in the early days that was a very disruptive force and now you’re seeing companies marshal themselves and have to reorient on their strategy and really answer the question of where you create value in an Amazon or a hyperscale cloud world," Rhodes told CIO. "How does that change your business model?"

Dive Insight:

Rhodes said we are now in an era where the big disruptors like AWS have claimed their stake, and companies like Rackspace need to work around them rather than against them.

This has led Rackspace to shift its focus toward helping companies manage their next-generation IT needs.

Rackspace has struggled in recent years. Gartner’s recent Magic Quadrant for Cloud Infrastructure as a Service report said, "Although Rackspace now delivers a solid set of basic features, it has not been able to keep up with the pace of innovation of the market leaders." That struggle, in part, led the company to go private in a $4.3 billion deal with Apollo Global Management in August. 

Filed Under: Cloud Computing