New Cloud Tiers Position Rackspace For More Managed Services Offerings

Rackspace's struggles to find a buyer didn’t stop the embattled cloud-service provider from significantly expanding its public cloud offering Tuesday in a move that could exacerbate tension between the company and its channel partners.

Rackspace unveiled two new service levels and an upgraded, more transparent pricing model that further position the company as a provider of managed services direct to businesses.

’More customers are looking for a trusted partner with specialized expertise to help manage their cloud … We are the partner that will be with them every step of the way to help make their cloud strategy successful," Rackspace CEO Graham Weston said in a statement.

[Related: Rackspace Shares Jump on Buzz Over Privatization]

The move could infringe on the business of some Rackspace partners, said Jeff Chandler, president of Rackspace partner American Technology Services.

’I have to wonder if they are actually cannibalizing business for some or most partners by going deeper into the managed services space," Chandler told CRN,

Weston went on to say in the statement that the "new service levels will help businesses tap the power of the cloud without the pain of recruiting experts in dozens of complex technologies."

Other Rackspace partners aren't surprised by the recent news out of the company.

It's ’just more of the same,’ said Lane Campbell, CEO of Chicago-based solution provider and Rackspace partner Syntress SCDT.

’They have a terrible partner program. They go direct. They undercut you. None of this seems to go against anything they’ve done in the past,’ Campbell told CRN.

Rackspace will now offer its public cloud in two service tiers: Managed Infrastructure and Managed Operations. Both plans come with a free cloud-monitoring service and include the high level of technical support dictated by the company’s Fanatical Support doctrine.

The company, which said in a recent SEC filing that it was having trouble keeping up with the industry’s frantic price cuts, appears to be attempting to further differentiate its IaaS offering from cheaper rivals with greater support and management features.

In addition to new tiers and pricing model changes, Rackspace also said it has a new program called developer+ intended to win over software developers by allowing them to sample the cloud services with an ’infrastructure credit.’

Chandler said the moves, when considered in their entirety, position Rackspace to compete with many rivals on several fronts.

’It seems Rackspace is taking on Microsoft Azure with their positioning, but the pricing approach seems more like a direct attack on Amazon,’ Chandler said.

’But the bundles and the +developer offering seem to be attacking a different set of players like Heroku. It seems like they took a page from Salesforce's playbook on that one. It also strikes me that they are competing more directly with Ingram Micro now, which also just announced a managed cloud offering,’ Chandler said.

NEXT: New Tiers Offer Advanced Services

The Managed Infrastructure tier includes Rackspace’s Fanatical Support, architecture advisors, security guidance, code development and launch assistance along with round-the-clock access to the company’s cloud engineers.

Managed Operations goes a step further with additional features such as a dedicated account manager, full time availability monitoring and response and management of common operating systems and application stacks, according to Rackspace.

That tier will be delivered with two approaches: Rackspace can either log into their customers’ servers to manage and make repairs, or it can execute those functions through its DevOps Automation Service, which manages infrastructure through code for faster deployments and streamlined operations.

The new pricing model applies to all new public cloud customers and is an option for existing ones.

’It features more transparency by highlighting the price of cloud infrastructure as distinct from service and support. This model allows customers to more accurately compare the true cost of cloud infrastructure from provider to provider,’ Rackspace said in its blog announcement.

That’s a good idea when you consider most cloud providers have adopted billing systems that are like ’complex calculators you almost have to be an engineer to understand,’ Campbell said.

But in the end, the new offerings are ’basically reinforcing their go-direct model, but just announcing a more transparent pricing system,’ Campbell said.

’They don’t feel the pain yet from all the smaller more nimble guys and they just keep isolating themselves from the partner community,’ Campbell told CRN.

PUBLISHED JULY 15, 2014