Rackspace Q2 Earnings Preview: Partners First, OpenStack Second

Rackspace (RAX), the OpenStack-centric cloud services provider, is set to announce Q2 earnings on Aug. 8. Forbes expects Rackspace profits to dip amid a cloud price war with Amazon Web Services (AMZN), Microsoft Windows Azure (MSFT) and Google App Engine (GOOG). But the bigger story involves new Rackspace sales and marketing executives who must bolster the company — and restore channel momentum.

Rackspace, a Top 100 Cloud Services Provider, announced disappointing Q1 results earlier this year, conceding that price cuts had hurt profits. Moreover, the company said OpenStack — the open source cloud platform — would not generate significant revenues for at least a year.

Forgotten Partners?

For most of 2013, Rackspace’s channel partner program has been relatively silent. Former Channel Chief Chris Rajiah is now at ViaWest, as are other Rackspace channel veterans. In recent months, The VAR Guy has asked Rackspace for an update on its channel leadership but the hosting company hasn’t offered up a comment.

Still, there have been signs of progress on the management front. Microsoft veteran Todd Clone joined Rackspace in June to lead the company’s direct and channel sales in the Americas. So in a sense, Clone is Rackspace’s new channel chief. And former VMware CMO Rick Jackson joined Rackspace in July to drive the company’s marketing efforts. Jackson certainly understands channel partners. 

Timely Advice

The VAR Guy’s advice: Stop evangelizing thought leadership and start promoting real SaaS and IaaS solutions through channel partners.

A prime example: In New York’s JFK International Airport, a massive Rackspace OpenStack and Open Source promotion is widely displayed in the JetBlue terminal. Most observers have never heard of OpenStack. But plenty of travelers are business owners who understand the need for Fanatical Support, hosted email, cloud storage and more. 

Market real solutions to real people, Rackspace. And start promoting your channel partners — again.

Wall Street isn’t too optimistic about the Q2 earnings release, scheduled for Aug. 8. But The VAR Guy is willing to take a longer-term view.