1 Comment

Summary:

Rackspace grew its public cloud revenues 36 percent year over year, to $99 million. That’s steady growth, although hardly the meteoric growth its chief rival Amazon Web Services seems to be experiencing.

awsrax

There’s a vein of Rackspace pessimism running through the world of cloud computing pundits so thick you’re likely to strike it wherever you start mining. Of course, it’s increasingly likely you might also strike some of Rackspace’s growing cloud revenues.

The hosting-provider-turned-cloud-provider, and the driving force behind the open source cloud software called OpenStack, grew its public cloud revenue 36 percent year over year, according to it second-quarter earnings released on Thursday. They came in just north of $99 million, up from about $72.5 million last year and just under $91 million for this year’s first quarter. At its current rate, Rackspace’s public cloud business — not to be confused with its flagship hosting business, which the company calls “dedicated cloud” — should reach a billion-dollar annual run rate in about 2.5 years.

That’s not too shabby, especially considering it really only transitioned fully to its OpenStack-based platform a year ago. The company swears OpenStack will let it do all sorts of new and better things,

Here’s the problem: Rackspace isn’t growing nearly as fast as chief rival Amazon Web Services. Amazon released its second-quarter earning a couple weeks ago and reported a 64 percent year-over-year increase in cloud revenues. (Well, technically, in “other” revenues, which many industry watchers believe is comprised largely of AWS.) It’s second-quarter take: $844 million.

Rackspace executives often insist they’re not trying to compete with AWS, Google or even Microsoft in terms using economies of scale to drive the cost of its core service down to near zero. That’s probably a good thing, because Rackspace isn’t building as fast as them, either. In their latest fiscal quarters, Google and Microsoft (obviously bigger companies with a broader breadth of products, but still) spent a combined $3.4 billion on capital expenditures, aka infrastructure. Rackspace spent just under $120 million and added only 4,762 servers.

Rackspace should be commended for its transparency and probably for the continued growth of its cloud business, as well. Running a multi-billion-dollar business isn’t anything to scoff at, either. But it seems unlikely Rackspace will be in the same league as AWS in terms of market share or revenue anytime soon.

The community of OpenStack clouds that Rackspace helped to launch might be competitive as a group, but no one else seems to have made much of a splash yet. Although, depending on how you count, Red Hat may have surpassed Rackspace in terms of contributions to the OpenStack project.

For what it’s worth, though, Microsoft and Google aren’t super-competitive with AWS yet, either. In April, Microsoft said Windows Azure (and related programs) had crossed the billion-dollar mark, and Google’s Compute Engine just became generally available in May.

  1. RAX needs some time to overtake the AWS. But Rax is still listed in top 3 position on cloud service providers.

    Share

Comments have been disabled for this post