You mentioned public and private clouds. Which direction do you see Rackspace partners going in? Public, private or hybrid?
That's an evolution that will continue to develop over the next few years. I'm seeing that becoming much more prevalent. For example, if your customer has a requirement and you have to test it and you need to stage it; I've seen some partners put that into the cloud to do that phase of it. And as they deploy it and grow into a more dedicated footprint, I've seen them take it and move it to a managed hosted offer for their customers. We have one disaster recovery partner that is able to replicate SharePoint data into a dedicated hosting environment or into a cloud environment. It's kind of hybrid computing at its best when you can store your information and leverage cloud technology at a fraction of the cost, or optimize the data around a managed services solution.
The Email & Apps division is planning a channel relaunch next month. Is that the same for the other Rackspace divisions as well?
As we evolve the channel programs, you will see us continue to offer within each of these businesses the best channel programs we can to allow partners to fill customer demand. Email & Apps is doing theirs, the Rackspace cloud team will launch theirs, and the managed hosting, which has been the traditional partner business that has the more established channel program.
What are some of the challenges you see partners encounter as they try to embrace some of these new technologies, whether it's on the managed hosted side, helping clients move applications to the cloud or the new SharePoint offering? What is Rackspace doing to help partners through those?
When you look at existing partners, we're helping them identify more opportunities within their business, even if it's an agency. A lot of times, agencies in the past have done a lot of advertising through print and on TV, and as they are looking to increase their online presence we are helping them with that in terms of being able to maximize the visibility of online campaigns that sometimes, because of the technology needs, the agency can't support. We can come in and we can provide them an infrastructure that allows them to do what they're best at doing.
In the area of software applications, we are creating product offerings that allow those software companies to expand their offering to a complete solution that involves hosting as well. So you're not just selling the product; now you can, in fact, provide a more turnkey solution. We are stepping in and being that natural extension to the partner that can offer unmatched services and reliable hosting solutions to go with that application.
In the VAR community, as we continue to move into that space and target that opportunity, we're making an alternate business model for them, different from what they're doing today. We're allowing the partners to maintain the reputation as a trusted adviser to the customer. Some of the challenges in the new VAR community are compensation -- how do they pay their reps in a monthly recurring model vs. a one-time sale of hardware and software? We are working with our partners and the channel programs we put are very lucrative in the sense that they enable the partner to understand that monthly recurring revenue model and allow them to compensate their sales teams for those kinds of transactions vs. one-time transactions.
Where do you see the biggest revenue opportunity for partners in the Rackspace program?
When you look at what Rackspace focuses on and you look at the data center layer, the networking layer, the device layer and the operation system, we can give that full solution: security, compute power, backup, storage, operating systems like Linux and Windows; we can go into virtualization and the database and into mail and collaboration tools. But when it comes to business processes, that's where the partners can take this infrastructure as a service and add their value on top of it. We're allowing our partners to do what they do best: Package this whole solution and allow them to do the design, the integration, the workflow and the governance. They still have a lot of consulting they can put on top of that and bring value to their customers. And we can be the best, industry-leading provider of that infrastructure to enable their success.
Looking across the competitive landscape, who is Rackspace's biggest competitor now?
We are the leader in this space. In the managed hosting space, we retain the No. 1 spot and in the cloud computing space, we are right next to Amazon and we plan to continue to shorten that distance between us. We consider ourselves the future IT provider in this space.
What do you see going forward for Rackspace and its partners?
We see the channel as a highly strategic asset and one that helps us achieve our growth plans and brings us closer to our customers. We will continue to introduce game-changing products and programs. I see an opportunity for us to enable our partners to offer that more complete solution and to truly impact their business and allow them to focus on their core business and make it a lucrative partnership. Our channel program is the strongest program out there today, and we feel that is enabling a lot of partners to come to us and partner with us, and we see this as an opportunity to continue to grow in 2010.