New Cloud Tiers Position Rackspace For More Managed Services Offerings

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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

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