Rackspace Colocation 'Another Tool for Channel Partners'

Rackspace now offers colocation services through its channel partners as it expands to fill needs for customers that aren’t ready to give up complete control of their IT infrastructure as they move to the cloud.

The all-new colocation services were unveiled this week as a way for enterprise users to deploy their own hardware into 10 specially-equipped Rackspace data centers where it can be managed and maintained around the clock by Rackspace personnel.

Henry Tran, general manager of managed hosting and colocation for Rackspace, told Channel Partners that the additional of colocation services means the company can be a better partner for end users by providing them with a wider range of needed services.

Henry Tran

Henry Tran

“Our strategy is to be the No. 1 service provider in this industry,” not just by moving their customers’ workloads but by being a fully equipped partner with them to help them get their work done in public or private clouds, colocation facilities or anywhere else, said Tran. “That’s the reason we are doing colocation.”

For customers and partners, the well-known Rackspace name is expected to help forge connections for the company, he said. In addition, the new services can be valuable for customers who might need additional managed services which can also be provided by Rackspace on demand as needed during peak workloads, said Tran.

The Rackspace colocation services will be offered through 10 data centers in Chicago, Dallas, Kansas City, Northern New Jersey, Northern Virginia, San Jose, Hong Kong, London, Moscow and Sydney.

Michael Levy, product director for Rackspace’s colocation services, said they will be available through the company’s traditional channel partners, as well as through new kinds of partners such as real-estate brokers who handle real-estate transactions for data centers.

“This offers another tool for channel partners to offer customers who are less inclined to relinquish their control” over all their IT processes, such as customers who are starting out with the cloud, said Levy. Through colocation, customers will have their IT hardware placed in Rackspace data centers, where it will receive space, power and cooling, and be managed and operated by Rackspace, simplifying the IT process for users.

Some of the new colocation data centers came to Rackspace through the company’s acquisition of Datapipe, a managed cloud and hosting vendor, while the remaining data centers were already part of Rackspace, This is the company’s first foray into providing colocation.

“Colocation is a natural extension of our existing products,” including managed hosting and cloud, Levy said. Rackspace provides managed services on cloud platforms including Microsoft Azure, Amazon Web Services, Google Compute and Alibaba Cloud.

Charles King, principal analyst with Pund-IT, said the significance of Rackspace’s move will depend on proximity to the data centers supporting the services and whether channel companies are actively engaging with enterprise customers who would want to use the services.

“It’s a potentially good incremental revenue stream for the company to pursue, which is all to the good,” said King. “However, it’s also a sector crowded with large and small firms, many of which focus on market- and industry-specific solutions. Rackspace’s experience in hybrid, private [and] public clouds should help the company differentiate itself, but competition is still likely to be fierce.”

Jay McBain, a global channels analyst with Forrester, agrees.

“This is a very busy market,” he said. “Forrester recognizes 33 leaders in this space with 17 of them offering managed services wrapped around their products.”

For Rackspace in particular, “channel partners that have customers with burgeoning capacity demands, colocation services can provide a flexible solution for hosting growing infrastructure as well as play a strategic role in cloud adoption and integration,” McBain said. “Rackspace has a large and loyal channel base that will be interested in this, and they definitely have the technical skills and hosting capacity to make this happen.”

McBain said he’s not surprised that Rackspace is entering this market even at this late date.

“It is an adjacent opportunity that is growing by double-digits,” he said. “I am surprised they weren’t there already.”

451 Research expects the colocation market to grow at 12 percent per year through 2020.