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Rackspace Goes All In on Managed Cloud Market Segment

SAN ANTONIO, TX--(Marketwired - July 15, 2014) -

  • New Enhanced Service Levels for Public Cloud Customers
  • Transparent Pricing Model
  • Rackspace Cloud Monitoring is Now Free for All Customers
  • New developer+™ Program as an On-Ramp to Managed Cloud

Rackspace (NYSE: RAX), the managed cloud company, today announced a new strategy to deliver public cloud services to the market based on its core strength in exceptional customer service, known as Fanatical Support®. The company's managed cloud strategy focuses on businesses and developers looking for a strong partner to help design, manage and scale their cloud operations. 

The company enhanced its managed cloud service levels and launched a more transparent service-based pricing model that represents a clear view of infrastructure pricing and emphasizes the value of Rackpace's cloud management expertise. In addition, Rackspace announced developer+, a new program for developers that offers essential services needed to build scalable applications. The program enables developers to easily sample Rackspace managed cloud services and Fanatical Support.

"The cloud market is evolving. More customers are looking for a trusted partner with specialized expertise to help manage their cloud. Rackspace is ideally positioned to lead this managed cloud segment of the market," said Graham Weston, Rackspace co-founder and CEO. "Our new service levels will help businesses tap the power of the cloud without the pain of recruiting experts in dozens of complex technologies. We are the partner that will be with them every step of the way to help make their cloud strategy successful."

New Enhanced Managed Service Levels

Both service levels -- Managed Infrastructure and Managed Operations -- feature more services and expertise at lower total cost than companies would spend managing cloud operations on their own. Highlights include:

Managed Infrastructure - This service level offers a package of benefits for customers that far exceed equivalent services from any other cloud provider. Customers will receive renowned Fanatical Support, which features architecture advisors, security guidance, code development assist, launch assistance, and 24x7 access to cloud engineers.

Managed Operations - This service level provides customers with Fanatical Support and all the services included at the Managed Infrastructure level, plus additional proactive features such as a dedicated account manager, 24x7 availability monitoring and response, and management of common operating systems and application stacks. Rackspace offers two approaches to deliver its Managed Operations service level to customers. In one approach, Rackspace logs into the customer's servers to manage and, when necessary, help fix them. The other approach leverages Rackspace DevOps Automation Service, which manages a customer's infrastructure as code, to help it achieve faster deployments and streamlined operations.

In addition, monitoring and enabling customers to have real-time visibility into their infrastructure is an essential part of the Rackspace Managed Cloud strategy. Customers on both managed cloud service levels will now receive Rackspace Cloud Monitoring at no charge. For Managed Operations customers, cloud engineers will also watch the customer's monitors and respond 24x7 to alerts.

Rackspace's enhanced service levels also provide additional value and offer a service level agreement that is not available with other providers. Customers on the Managed Operations service level will see SLA credits doubled, up to 100 percent of their fees for the affected components for that month's billing period.

In addition, Rackspace is highlighting the value it provides over unmanaged cloud providers by offering cloud deployment planning and the availability of proactive assistance included in all of its service levels. Managed Operations customers with planned high traffic events will be able to work with Rackspace to help design their managed cloud infrastructure to cope with the expected levels of traffic. In addition, Managed Operations customers will have access to a new SLA for these events. Now in limited availability, the SLA provides a 10x accelerated credit during these planned events for up to 200 percent of the customer's fees for the affected components during that month's billing period, subject to certain restrictions. 

"Rackspace is a huge part of our application development," said Guillaume Aubuchon, CTO at DigitalFilm Tree, which provides pre- and post-production services to the movie industry. "It's crucial that we have instant access to someone who knows both Rackspace's infrastructure and our application to help guide and support us as we scale up or build out new features. The value of Rackspace Managed Cloud goes well beyond that. Without Rackspace, we would spend more than $100,000 per year on an in-house engineer to keep our Critique servers running 24x7. Rackspace lets us focus on work that will grow our application and make our business more efficient and profitable."

New Transparent Public Cloud Pricing Model

Rackspace's new pricing model applies to all new public cloud customers, and is optional for existing ones. It features more transparency by highlighting the price of cloud infrastructure as distinct from service and support. This model allows customers to more accurately compare the true cost of cloud infrastructure from provider to provider. For instance, Rackspace's Performance Cloud Servers start at 3.2¢ per hour for 1GB server. These include RAID 10 SSD, redundant components, and ECC RAM all running in highly reliable Rackspace data centers. It also delivers more clarity around all the services that Rackspace provides -- services that customers of unmanaged cloud providers have to obtain on their own by hiring engineers.

Managed Infrastructure service level offers an hourly service level rate of $0.005/GB RAM, with a $50 per month minimum, plus standard infrastructure rates.

Managed Operations service level offers an hourly service level rate of $0.02/GB RAM, with a $500 per month minimum, plus standard infrastructure rates.

With this pricing model, customers will be able to see their infrastructure pricing in comparison to the market.

Rackspace also will continue to provide volume pricing discounts, so as a customer grows, the price of additional servers declines. These discounts are automatically applied. As a customer grows, its unit cost will decrease. Volume discounts range from 4 percent to 24 percent and will start at compute usage rates of $5,000 a month.

"Competition in the public cloud market has accelerated in the past year; however, Rackspace's managed cloud approach provides an opportunity for significant differentiation from the rest of the pack," said Melanie Posey, research vice president at IDC. "Rackspace's new managed cloud strategy featuring enhanced SLAs and its long track record in delivering superior support will create sustainable competitive advantage in an increasingly crowded market."

developer+ Program

Rackspace's new developer+ program provides an infrastructure credit for a package of cloud services for a limited time. It is designed for developers who want to stay fast and lean and focus their engineering talent on building their app, rather than swelling their payroll with engineers who manage IT operations that don't differentiate their business. This program paves the way for customers to grow with Rackspace, and to understand and adopt its hybrid and specialized services. This program empowers developers not only to experience Rackspace's offerings, but to also build and scale out cloud applications leveraging the full Rackspace cloud portfolio, including the recently announced OnMetal™ product.

For customers participating in the developer+ program, Rackspace will provide an Infrastructure credit, which can cover a Performance Cloud Server, a Cloud Load Balancer, Cloud Monitoring, Cloud Networks, Cloud Backups, Cloud Files, Cloud DNS and built-in Email as a Service via Mailgun, for example. In addition, developer+ customers will be able to consume all other Rackspace cloud services in any region at the adjusted infrastructure prices without the bundled service level rates.

Developers will have access to public forums, IRC support, online documentation, direct access to Rackspace developers, alongside a fully redesigned developer portal. Developers are eligible to participate in this program for up to 12 months before transitioning to either the Managed Infrastructure or Managed Operations service levels. The developer+ program will be available to customers in late July.

For additional information on Rackspace's managed cloud strategy and new offerings, please read the blog by Rackspace President, Taylor Rhodes.

About Rackspace
Rackspace (NYSE: RAX) is the #1 managed cloud company. Its technical expertise and Fanatical Support® allow companies to tap the power of the cloud without the pain of hiring experts in dozens of complex technologies. Rackspace is also the leader in hybrid cloud, giving each customer the best fit for its unique needs -- whether on single- or multi-tenant servers, or a combination of those platforms. Rackspace is the founder of OpenStack®, the open-source operating system for the cloud. Based in San Antonio, Rackspace serves more than 200,000 business customers from data centers on four continents. It ranks #29 on Fortune's list of 100 Best Companies to Work Forrackspace.com.

Forward Looking Statement
This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of Rackspace Hosting could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements concerning expected development, performance or market acceptance associated with Rackspace Managed Cloud Services and developer+ program; anticipated operational and financial benefits from Rackspace Managed Cloud Services and developer+ program; any statements concerning expected development, performance or operational results related to any particular customer or customers of our customers associated with our managed cloud solutions; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the possibility that expected benefits from Rackspace Managed Cloud Services and the developer+ program may not materialize because these services are not generally accepted in the marketplace, which could occur due to certain factors including (i) a failure to market the services cost effectively, differentiate the services from competitive products or communicate differentiations effectively, (ii) the reliability, quality or compatibility associated with the services, (iii) changes in technology which adversely affect the services' benefit, (iv) slowdowns in the general economy or technology industry that impact consumer spending habits, (v) internal strategy decisions that impact the services, (vi) issues relating to the performance of a customer's configuration caused by forces outside of the control of Rackspace; and (vi) other risks that are described in Rackspace Hosting's Form 10-Q for the year ended March 31, 2014, filed with the SEC on May 12, 2014. Except as required by law, Rackspace Hosting assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Rackspace Media Contact:
Brandon Brunson
210-312-1357
[email protected]

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