back to article Rackspace refuses to enlist in cloud's latest price cutting war

Cloud provider Rackspace will stand on the sidelines as Amazon, Google, and Microsoft slash prices in an attempt to destroy each other's profit margins. The web hoster's chief technology officer, John Engates, told El Reg's cloud bureau by email that "Rackspace is not a commodity cloud provider," when we asked if it would …


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  1. PushF12

    Rackspace is probably screwed

    And so is anybody that runs a business that depends on capital investment in computer equipment. Getting "premium service" is exactly the opposite of what a competent IT team wants -- it usually means vendor lock-in and another IT weenie in the decision pipeline.

    Amazon, Google, and Microsoft buy such a large percentage of server hardware directly from the ODMs that they are suffocating the OEMs too. Apple is doing the same thing on the consumer side.

    What we're seeing here is the proper commoditization of computing and the formation of a modern Standard Oil.

    1. Nate Amsden

      Re: Rackspace is probably screwed

      you forget that most IT teams are not competent. Nor are the developers who think they can run stuff in some amazon or azure cloud because "they have an API".

    2. ecofeco Silver badge

      Re: Rackspace is probably screwed

      Maybe, maybe not.

      You really can price your product and service so low that you go out of business. Been there, done that.

      Competitive pricing is good, but price wars lead to predatory pricing, which is not only illegal but can only be won by the deepest pocket. Best to stay out of that trap.

      People will pay a little more for stability and reliability. Not all customers, but enough to keep many businesses in business without having to worry about price wars.

    3. Anonymous Coward
      Anonymous Coward

      Re: Rackspace is probably screwed

      Lock in? I thought they ran OpenStack? so should be fairly easy to migrate right???

    4. Destroy All Monsters Silver badge
      Paris Hilton

      Re: Rackspace is probably screwed

      the formation of a modern Standard Oil

      A very "progressive" stance. How do you figure?

  2. Sebby

    Well, Good Luck to 'em

    Rackspace seems to have forgotten that once upon a time it was engaged in a fierce price war per unit with its competitors. 1.5c/h at the lowest tier, and it shone with a powerful light, and sold itself as the underdog that it was, and with all the trimmings to boot. I have no doubt that many customers, including yours truly, were enticed by the unbeatable prices for such an important contender in cloud. Especially because, for entry-level applications, it was very economical, indeed.

    Good luck to them. I'm looking for good prices, but also good service. Rackspace has met both requirements for me thus far, unlike the others. "Premium pricing" is only going to borrow you so much loyalty though, and if a ubiquitous cloud starts offering reasonably-priced per-incident support, IPv6 and public-facing IPv4, the game is probably up.

    1. DryBones

      Re: Well, Good Luck to 'em

      How's that support, though? Crap support is crap support, it being affordable doesn't make it acceptable.

      1. Sebby

        Re: Well, Good Luck to 'em

        Very reasonable, since you ask (not counting the higher tiers/managed services). I do wish they'd make more stuff vertical (multiple IP addresses, full RDNS etc) but unless you start asking very direct questions about your side of the investment (i.e. anything they don't put in the package) you should be set. They've been very courteous and understanding.

  3. GregRobson

    So on one server quote the cost difference is $3,504/year. On 10 servers that's $35,040/year. At that point you may wish to use Azure/AWS/Google and pay for readily available competitive implementation/support contractors/staff.

    If they are turning it into a commodity, then don't be surprised when lots of companies spring up in the near future with AWS or Azure qualifications.

    3rd party vendor products are also going to be built with the big boys in mind. Integration costs may be higher with Rackspace.

    Seems like they are moving into a very niche market now.

  4. Daniel B.

    I have to concur with Rackspace, even when that means I don't get super cheap virtual servers. Price wars are good for us, but if nobody stops at some point it becomes a bloodbath where only those with deep pockets will be able to survive.

    As far as my experience goes, Rackspace does have pretty good uptime and support, and its pricing is still within the decent range. They're now offering IPv6 and extra "storage blocks" which seem to be just extra virtual HDDs. My only complaint in the earlier days was that you had to up everything, not just the HDD space if you needed more. This seems to no longer be the case and that's good.

    Haven't been able to do AWS as they don't do CVV2 validation and all my cards bounce because of that; and Google is one company I just don't trust for private data. So I think I'm staying on Rackspace Cloud even if it is now a bit more expensive...

  5. Jan Hargreaves

    One of my clients uses Rackspace and I am in the middle of signing up another. Can you call Google, Amazon or Microsoft? Well... yes but after being passed around several cities globally with people for which English is not their first language, you may finally get some help. Once they have taken over your computer as they can't just tell you what to do. Sometimes the wait for answering a call is an hour or more.

    Rackspace have direct numbers all over the world. You phone support and within 1 or 2 rings it's picked up and answered by very polite and competent support staff. They are courteous, open and fix problems very quickly. Frankly its worth the extra expenditure and I'm sick of the lowest common denominator where as long as it's really cheap people put up with pathetic service. I applaud Rackspace for sticking to their principlies and offering an alternative. It's my favourite cloud provider currently.

  6. Javapapa

    My experience with Rackspace has been good

    I only use a single Cloud Server, started at the bottom with 256 MB, doubled recently to 512. Plenty of oomph for Tomcat/MySQL web app development and testing. I manage (mismanage?) the server with an occasional (so far $0) Trouble Ticket request; answers have been accurate and helpful. They are following a sensible mix & match strategy with CPU/RAM/HDD (or SSD) combos with Cloud Blocks (mounted files), Cloud Files (streaming files via URL), message queues, load balancers, MySQL servers, etc. Having been spoiled by years of AS/400 system management simplicity, as an programmer I appreciate their attention to detail in enabling extra functionality without me having to be a full blooded network admin. For a production app I would use their managed services. Sensible company.

    1. trevogre

      Re: My experience with Rackspace has been good

      I think that they need to respond by lowering the cost of their servers, but keep and grow the managed tier and make their money there. That way they can attempt to break even on the do it yourself crowd and stay competitive and use the managed tier that you can't get with their competition to make their money, because the more people that launch servers on their system at a lower cost, the higher the probability that they can convert them to managed customers. I know that for me, decreased costs would put me in a position to do more experimentation but I want the no administration server style that you can get with app engine or azure. So when I think about Rackspace I want the managed tier for running custom configurations but I don't want that reliability until I go to scale, I just want a cheap way to roll up a bunch of very underutilized virtual instances that I can test out solutions on. Eventually the cloud has to go the way of the os in these wars, where the lowest scale version of a server is free, and you only start paying when your utilization goes up.

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