Rackspace overhauls pricing in attempt to stand out from Amazon


Rackspace (RAX -1.7%) is breaking up its cloud infrastructure (IaaS) offerings into two service tiers: A basic Managed Infrastructure tier that provides standard IaaS services and technical support, and a Managed Operations tier that adds "proactive features such as a dedicated account manager, 24x7 availability monitoring and response, and management of common operating systems and application stacks."

The company is also now providing its Cloud Monitoring service for free to all IaaS clients, and launching a program (called developer+) that provides cloud app developers a bundle of services for free for 12 months. As GigaOm notes, Amazon currently has a big edge in developer support; Google is also trying hard to woo developers.

Rackspace argues its new pricing structure allows it to offer "a service level agreement that is not available with other providers," and makes clear to buyers they're receiving services not provided by cheaper rivals. CTO John Engates: "People looked at our price and the AWS price and thought they were comparing apples to apples. In reality, we had apple pie, not apples."

Amazon, Google, and Microsoft's aggressive IaaS pricing has weighed on Rackspace's shares for some time. The company has already declared it'll compete on service quality rather than price.

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Comments (2)
  • Phi Investing
    , contributor
    Comments (11) | Send Message
     
    As I've studied and written about RAX, the major factor is their ability to retain and acquire talent. If that goes, so does any competitive advantage.
    15 Jul 2014, 01:44 PM Reply Like
  • Tom Sandlow
    , contributor
    Comments (303) | Send Message
     
    CTO John Engates: "People looked at our price and the AWS price and thought they were comparing apples to apples. In reality, we had apple pie, not apples."

     

    Sounds more like the CEO is selling spiked kool-aid to his investors.
    16 Jul 2014, 05:43 PM Reply Like
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