Rackspace Predicts Cloud API Showdown With Amazon, VMware

By samdizzy

During a quarterly earnings call a few minutes ago, Rackspace Hosting predicted the cloud computing market will boil down to three APIs (application programming interfaces) and cloud standards: OpenStack, Amazon Web Services and VMware. For cloud services providers, Rackspace is essentially saying that it’s time for CSPs to choose sides as customers seek to leverage open technologies for public and private clouds.

No doubt, Rackspace has momentum. Rackspace Hosting‘s Q3 2011 revenues grew nearly 33 percent to $265 million, the cloud services provider (CSP) announced today. Rackspace indicated that the company is now managing nearly 80,000 servers and more than 160,000 customers. Rackspace’s Q3 net income was $20 million, up 69.2 percent from Q3 2010. The results beat Wall Street’s expectations, according to Barron’s. Talkin’ Cloud believes Rackspace is carving out a niche for itself between big telco providers and small data center providers.

Rackspace pointed to three Q3 milestones, which included:

1. The launch of Rackspace Private Cloud, which will allow customers to replicate Rackspace’s cloud technology in their own data centers. Much of the strategy leverages OpenStack. Matt Weinberger offers analysis in this blog entry. During an earnings call today, however, Rackspace conceded that the private cloud effort will not drive big top-line revenues for at least two years or so.

2. Growing momentum for OpenStack, which has attracted 130 partners so far. Of course, it’s important to keep things in perspective: It’s difficult to pinpoint how many cloud services providers have actually implemented OpenStack technologies in their data centers. There will be room for multiple cloud APIs in the market, Rackspace predicted during an earnings call today.

At one point in the call, Rackspace indicated that the primary players will likely be Amazon Web Services, VMware and OpenStack. But later in the call, Rackspace trimmed the prediction to Amazon Web Services and OpenStack. Rackspace did not mention Eucalyptus, a company that essentially provides and open source version of Amazon Web Services upon which customers can build their own private and public clouds.

3. An expanded partner program, which now includes a closer relationship with EMC. Here again we’re digging for a reality check, and trying to determine how many VARs and MSPs are reselling Rackspace cloud services.

During the financial analyst call, Rackspace said it was “pleased with take rates with managed clouds,” suggesting that the company sees continued upside ahead.