Rackspace about to leave Public Cloud IaaS market

Rackspace, the IT hosting and cloud computing company, co-founder of Openstack, is apparently discontinuing its Public Infrastructure as a Service (IaaS) offering, and instead planning to focus on cloud services such as managed cloud, where the company is going to support customers on how to build and manage their own cloud services.

According to Bloomberg, back in May Rackspace decided to hire Morgan Stanley, the American financial services corporation, to decide the best options for the future of the company, including selling or ally with other technology companies.

To compete in the market of the Public Cloud, Rackspace should at least make investments of the same order of magnitude as Amazon, Microsoft and Google, that rely on a market strategy different from that which might be sensible for a company with high added value such as Rackspace.

As Forbes wrote on its article, it is difficult for companies like Rackspace to compete in the price reduction game, maintaining the margins for a profitable business, while companies like Amazon and Google do not provide managed services. AWS for example, can count on more resources but it lacks on expertise in providing services, which allow them to provide low cost infrastructure relying on third parties to develop their business services.

To help understand Rackspace decision to leave the Public Cloud Iaas market and focus on its core competency, managed services, this graph shows the proportion in the investment, Rackspace has spent around $1B in cloud investment that could seem enough but its definitely far from its competitors.