Rackspace has an “in” with their existing traditional hosting customers. But you have to ask yourself how many of them already are satisfied with a traditional model of computing. After all if they don’t even want to host their own infrastructure what’s the appetite for investing in the development effort needed to build cloud aware applications.
This means that beyond their existing customers they have to appeal to the market you mentioned above. This is a competitive landscape. These organizations not only have to choose between vendors but platforms and strategies. Do they want to just extend their existing enterprise using vCloud or SCCM/Azure (one day). Or do they want to build a new delivery model all together. Once, this decision is made the next question is which platform/vendor.
What’s the pool for this type of organization. Rackspace is probably the best option for an Openstack Cloud but what’s the market potential for OpenStack clouds? I agree this is what we are seeing in their results.
Originally posted on Gigaom:
Here’s the narrative that cloud vendors would like us to believe: there are infinite workloads flowing to clouds of infinite capacity. There’s enough business for all, keep moving.
But there is nagging worry, sparked anew by Rackspace’s laggard Q1 cloud growth, that the appetite for cloud services may not be unlimited after all. For its first quarter ending March 31, Rackspace(s rax)logged $91 million in public cloud revenue, up 4 percent sequentially and 40 percent year over year. It is the quarter-over-quarter number that has people spooked; given that Rackspace has been touting its new OpenStack public cloud, folks expected much better numbers.
To be fair there are nuances about the Rackspace quarter to be examined. First, it blamed some of the inertia on price cuts on some services during the quarter. And the newer OpenStack-based public cloud business was up 75 percent sequentially, CEO Lanham Napier told analysts on the company earnings call Thursday night. The problem is demand for the older Slicehost-based cloud technology evaporated and bookings for the new cloud haven’t taken up the slack. New customers are being directed to the OpenStack option.