Rackspace, battling Amazon, tiers cloud services to show off its strengths

Rackspace(s rax), the cloud provider that has always differentiated itself based on the value of its “fanatical support,” is now tiering its more basic IaaS cloud resources from its higher-level, support-intensive offerings. The goal is to make comparisons with public cloud giants Amazon Web Services(s amzn), Microsoft(s msft) Azure and Google(s goog) easier and to play up the fact that, for a little more money, Rackspace can offer much more hand-holding than those public cloud giants.
The San Antonio, Texas-based company has always had core infrastructure and higher-level managed services, but didn’t do a good job explaining that to customers, according to Rackspace CTO John Engates (pictured above). “People looked at our price and the AWS price and thought they were comparing apples to apples. In reality, we had apple pie, not apples,” he told me.
So, going forward, Rackspace will offer managed infrastructure starting at $0.005 per GB RAM ($50 minimum per month) and higher-level managed operations at $0.02/GB RAM ($500 minimum per month). The latter is “all-in managed cloud”  where Rackspace does much of the heavy lifting for customers, Engates said.
Carl Brooks, an analyst with the 451 Group, said this messaging will help clarify Rackspace advantages to potential users. “What they’re doing here is getting out of the endless comparisons with AWS/MSFT/GOOG,” he said via email.
“Rackspace can now say, look, it costs X, same as the big vendors … but we have support and oh yes, we have 10GB internal networking and $0.02 extra gets you a whole unicorn and a princess party all to yourself and there’s no way in hell AWS or Azure can touch that,” Brooks added.
rackspace tiersRackspace is trying to clarify its offerigns but in fact, it already offered managed cloud services. “This announcement doesn’t even tough Rackspace’s ‘dedicated cloud’ aka its managed hosting business which remains by far the largest part of their revenue,” Brooks added.

Calling all developers

To attract more developers to its platform — and perhaps woo them from AWS — a new “developer+” program will provide an array of resources — 40GB of CloudFiles storage, free monitoring, networking, DNS, email service for up to 50,000 messages per month, load balancing — free for 12 months. This is important because developers are the constituency that has driven AWS success.
“Free resources for an entire year — that’s better than Amazon’s free tier because you can actually run a real app on it. The AWS free tier is not enough to do anything interesting,” Engates claimed. I’ll leave it to AWS fans to dispute that contention.
Rackspace is much smaller than these huge public cloud players, which have other profit centers to fund massive cloud projects. That is one reason it hired Morgan Stanley in May to evaluate options, including a possible sale or merger.
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