Rackspace Ratchets Up Cloud Computing Competition

Rackspace Hosting (NYSE: RAX) has significantly expanded its cloud computing offering with the acquisition of two companies and the inking of two new partnership deals. These moves have fundamentally reshaped Rackspace's cloud computing capabilities, prompting the company to rebrand its existing hosting and storage services.

Slicehost and Jungle Disk are the two companies Rackspace acquired for a combined stock-and-cash payout of US$11.5 million. The deals could reach $16.5 million with cash and stock additions based on performance criteria. Rackspace also established relationships with Limelight Networks and Sonian.

Big Jump in Expertise

Slicehost and Jungle Disk are providing on-demand virtualized servers and online storage software and services, respectively, to Rackspace's cloud computing offering.

"It is a big jump in our expertise and an acceleration of our offerings," John Engates, CTO for Rackspace, told TechNewsWorld. "We have some things in the works internally that would have gotten us to this point, but it would have taken us a longer period of time to reach."

For instance, the addition of Slicehost's virtual machine hosting capabilities will allow Rackspace to offer more dynamic services.

"Until now, Rackspace has offered hosting on mostly dedicated servers," Engates explained. "Virtualization was part of the offering, but it wasn't a primary feature of the product." Of the 40,000 servers at the company, about half were virtual.

Slicehost provides Xen-based virtual machine hosting with more than 15,000 "slices" currently online, as well as larger slices for high computing performance and IP-sharing for high-availability computing. Rackspace is introducing a new on-demand server capacity service called "Cloud Servers" via this acquisition.

Jungle Disk offers cloud storage that allows multiple users to share an unlimited amount of space through a mountable network drive and automatic backup. It will integrate with Rackspace's Internet-based storage service, which has been renamed "Cloud Files," using Limelight Networks to offer scalable content delivery and application acceleration services.

Jungle Disk comes in both desktop and workgroup editions on the Windows, Mac and Linux platforms. It currently supports the Amazon (Nasdaq: AMZN) S3 platform, but will port to Rackspace's Cloud Files within a few months. Cloud Files is in beta right now, Engates said.

Sonian, a provider of cloud mail archiving applications, will also be porting its product line to the Rackspace cloud. Sonian and Mailtrust, Rackspace's e-mail hosting division, will be offering low cost archiving to Mailtrust's 100,000 plus business domains.

Game On

RightScale, CohesiveFT, rPath, SOASTA and Vertica have also expressed support for the Rackspace cloud.

Rackspace intends to integrate their services into its own hosting portfolio as a suite offering that will include dedicated managed servers, hosted e-mail applications, scalable cloud hosting and storage services, all based on open standards and technologies. The company has rebranded its Hosting Cloud flagship cloud offering as "Cloud Sites." Developed by Mosso, the company's cloud division, it offers a scalable platform and a pay-as-you-grow pricing model.

The pricing model is a big part of the cloud's appeal. "A company can run the vast majority of its IT operations in a completely virtualized environment with little long-term financial commitment," said Engates. "It could pay daily or weekly, for instance, for a powerful combination of services."

A number of companies have begun offering comprehensive cloud services, including IBM (NYSE: IBM), Amazon and Google (Nasdaq: GOOG).

The latest changes will allow Rackspace to compete against these heavy-hitters, Daniel Golding, vice president and research director of Tier1Research, told TechNewsWorld.

"It needed to do this in order to be competitive," he said.