Rackspace’s new president knows he has a raft of competitors in the cloud wars, but he worries about some more than others. And he knows Rackspace has to prove it can compete with competitors — especially one competitor with a ton of scale. “They’ve gotten ahead of us, but we’re in a very long game,” Taylor Rhodes said this week.
He didn’t utter the “A word” but he was talking about Amazon Web Services, which launched in 2006 and started building a massive business while competitors — Rackspace, along with legacy IT players like IBM, Microsoft, HP — were getting their cloud acts together.
Going forward in 2014, “our challenge is around perception and building momentum,” Rhodes said in an interview the day his new gig was announced. It’s not like Rackspace, San Antonio, Texas, has been standing still. It launched its OpenStack-based public cloud in 2012, but it’s a brutal game.
For its most recently closed third quarter, it saw good cloud revenue growth: public cloud revenue grew 36 percent year over year to $99 million from $72.5 million. Meanwhile, Amazon for its second quarter, saw its “other revenue” (which is basically AWS and some other stuff) grow 64 percent to $844 million year over year. You see the issue.
But Rhodes, who has been with Rackspace for 7 years, most recently as chief customer officer, said there is no shortage of customers who will pay for the “fanatical support” that Rackspace offers as a differentiator. “In our first decade we had to convince companies doing do-it-yourself [IT] why they should choose a specialist — why invest in it if it’s not my core business … Going forward, we’re specialists bringing a great service model to do more than do-it-yourself atop a cloud platform.”
The big legacy players are pouring resources in this field — IBM said it’s investing $1.2 billion to build out 15 shiny new cloud data centers this year — but it’s clear where Rhodes priorities are.
“There are competitors I worry about and competitors I’m not worried about. There are competitors out there now gaining market share — I don’t worry about the large traditional tech players as much,” he noted.
As for competing with IBM, which bought SoftLayer for $2 billion last year to bolster its cloud cred, he noted: “IBM has no shortage of smart people or budget, but this will be hard for them. When we compete against IBM we feel well equipped, especially in areas where we are specialists.”
If a company wants someone to come in and rearrange its data center, “I’ll be happy to give it IBM’s number,” he said.