Rackspace: We'll Compete on Service, Not Price

As everyone and their mother gets in on the cloud price wars, Rackspace (RAX) is taking a different approach to the market and aiming to provide quality service at higher prices. This is how the company is hoping to compete against the likes of Amazon Web Services (AWS), Microsoft (MSFT) Azure and Google (GOOG)  Cloud Platform.

Even Big Blue has gotten into the price wars game and the continuing race to the bottom.

But Rackspace company executives remain adamant that it’s not going to engage in the game of price tag leapfrog. Instead, according to a recent article on Business Insider, Rackspace is intent on playing in the growing public cloud services business by providing what its executives believe is a higher quality of service than its competitors.

Contrast that with the strategy employed by public cloud infrastructure-as-a-service (IaaS) leader Amazon Web Services, which has made 44 price cuts since the launch of its public cloud services arm. Amazon has plans to increase that number. Microsoft, Google, IBM (IBM) and other IaaS players have also followed suit; and as they continue to see benefits from decreasing prices, Rackspace is intent on competing on a different level entirely.

Currently, Rackspace’s public cloud services are priced higher than competitors, but CTO John Engates told Business Insider that his company’s offerings are more reliable; and that demands a premium. He claims Rackspace pricing is no higher than 10 percent to 15 percent of AWS pricing.

This strategy also extends to Rackspace’s new managed cloud service levels, which were announced last week.

All of this isn’t to say Rackspace isn’t considering its pricing in the growing competitiveness of public cloud. The vendor recently revamped its pricing model “to provide a transparent and separate view of infrastructure prices and the value of cloud management expertise,” wrote Taylor Rhodes, Rackspace’s president, in a blog post.