Rackspace's Answer to Amazon: Higher Price, Better Service

Rackspace CTO John Engates


Rackspace CTO John Engates

Amazon, Microsoft, and Google might think price cuts are the way to go in the highly competitive public cloud sector, but the San Antonio-based Rackspace seems to think otherwise.

It rolled out a new managed cloud service plan earlier this week that focuses on more reliability and better customer support - at a higher price tag.

Every new customer at Rackspace will now be a part of its entry-level Managed Infrastructure plan, which offers architectural advice, security guidance, and 24-7 access to cloud engineers.

People seeking a more proactive service can opt for the Managed Operations, which allows Rackspace to actually log into a customer's servers and manage code, speeding up the streamline and deployment process.

To put it more simply, it's a public cloud infrastructure embedded with a much more customer-friendly, management support. For example, if your application goes down at 3 a.m. and you need operational help, Rackspace engineers will be there to fix the problem.

"This is fundamentally far and away a different service than just an unmanaged public cloud commodity infrastructure," Rackspace CTO John Engates told Business Insider. "We're really sorting the market into the people who value managed services versus the people who have no interest in Rackspace taking an active role in their management."

Rackspace's managed service comes at higher price point than that of its competitors. The Managed Infrastructure charges $0.005/GB RAM per hour, with a $50 per month minimum, in addition to the standard infrastructure costs. Managed Operations costs $0.02/GB RAM per hour, with a $500 per month minimum and standard infrastructure costs.

For comparison, Amazon Web Service recently said it dropped its price 44 times so far and "lots and lots of bills" are less than a dollar a month. And they said there'll be more price cuts.

"Our cloud is more reliable than Amazon or Google cloud," Engates said. "More reliability commands a slightly higher price segment, but it's not more than 10 to 15% higher than AWS."

In fact, Rackspace is so confident in its new service that it will give early startups and individual developers a chance to test out its product for free. The new Developer+ program will give potential customers a 12-month trial period to try their product on Rackspace's managed cloud.

"We think once they try us out and get a taste of what our operations are all about, they will opt in to one of our products," Engates said. "We think the timing is right to double down on managed cloud."

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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