Rackspace is not the company it once was. Having hit severe headwinds with its single focus approach the firm is changing tack.
2014 has been an interesting year for Rackspace. In March the company put a ‘For Sale’ sign up and removed it in October having chosen to go it alone.
November saw it report Q3 profit of $26m up from $16m in 2013’s Q3 and revenue of $459.8m up from $388m a year earlier. For Q4 2014, Rackspace said it expects revenue of $469m to $476m.
CBR, Q: What is Rackspace?
Jeff Cotten: As we become a services company – which is what we are at heart – it is about widening our portfolio to include other types of workloads, types of cloud infrastructure as well as going much deeper into areas like ecommerce.
So partners become tremendously important – Magento for example is a tremendous partner for us in the ecommerce space. More and more Microsoft is becoming a strategic partner for us. We launched services on top of Hyper V so we can add an additional virtualisation layer into our portfolio. We also launched a relationship with Google so we’re now providing capabilities on top of Google apps.
Our aspiration is to provide an agnostic set of flexible options for our customers so they are not pigeonholed into Microsoft, Vmware or Openstack. We’re going to offer flexibility for them to plug into that platform layer so we have those partnerships with Microsoft, Google and VMware.
Then we also have specific application stacks with the primary focuses on content management, ecommerce, big data – those are the ones we talk about the most. In big data we offer, MongoDB, Hadoop and MySQL.
Same thing in the ecommerce world. We’re focused on Magento and will look to extend that to others as we deepen that stack.
So for us it about being in the platform layer as well as in specific application verticals.
Content from our partners
CBR: How are you taking it to market?
GC: The channel becomes more important to us. We’re predominately direct today and this is a great opportunity. We hired Bill Knight from Microsoft to run our channel programme globally. His focus is to extend our channel. Today our opportunity is to extend it through digital agencies. These are companies that don’t want to focus on all the different infrastructure technologies. They want to focus on delivering to their clients enriched application experiences and leveraging Rackspace to do all the back end infrastructure work. They are one of our biggest sources of business for us today.
What is interesting is if you look at a company like Microsoft – and remember Rackspace is a huge channel for Microsoft as we sell a lot of Microsoft software – as they build out their cloud platform the question becomes are they going to compete with their channel partners or are they going to enable channel partners to provide that service layer on top.
We obviously want to be one of the contenders to provide that service layer on top of various infrastructures so we don’t want to create the same problem.
We won’t for example want to create the rich digital interactive business so we will avoid competing with our partners.
Q: There are rapid changes in Rackspace – how are communicating your new product sets to the market?
JC: It is important for us to approach the market from a workload perspective. We have big data, ecommerce and private cloud customers. Enterprise IT is saying ‘I have a load of different workloads and I value someone who can build cloud infrastructure in my data centre, and also where I can burst into it to a third party like a Rackspace.’ And we’ve seen acceleration in our private cloud business in 2014 and we look for that to continue into 2015.
It can be for example about building a VMware private cloud, a HyperV private cloud or an Openstack private cloud.
With VMware it can be in a Rackspace data centre, with Openstack it can be in your data centre or in ours. And now we’re looking at all three options across both infrastructure platform options.
So we can deliver from our data or yours across Openstack, Microsoft and Vmware.
Another area where we’re seeing real traction, although it is in its infancy, is DevOPs as a service.
Many companies are trying leverage cloud technology to get to market faster to drive their business. They don’t want to hire the experts or invest in the resources to figure it out. They are saying ‘we can’t find or keep people because Chef and Puppet and other automation technologies are really rare.’ And they value a company that is going to provide that as a service.
Traditionally Rackspace would provide a service in a systems administrator way. We go in and build a hardened infrastructure to give you the resiliency. In the DevOps world it is the software on top of the infrastructure that delivers that resiliency. It is all automated. The DevOps service is helping our customers create that automation so they can focus on building, for example rich media digital applications.
We’re already gaining traction – we believe we’re exiting the early adoption phase of cloud and now getting to the mainstream. The early adopter frontier phase was those who wanted to learn the 96 APIs to build applications resiliency. Now you’re getting into the mainstream that says want to get that advantage but I don’t want to have to figure it all out. That’s where DevOps comes into play because it is a service layer that allows them to concentrate on their business.
CBR: What’s happening in your traditional market?
JC: Colo is a relatively straightforward market. What we’re seeing is colo players reaching out to us because they want space and some managed services as well.
There is an opportunity for us to partner. Rackspace will not deploy a data centre in every single city across the globe so colo presents an option for us to partner to provide our private cloud on the colo’s infrastructure and provide the managed service on top of that.
CBR: What are your infrastructure and capital deployment plans?
JC: We built out latest facility in the London area with Digital Realty in Crawley and the emphasis for the foreseeable future is on filling up that capacity.
