Rackspace Inc. has a problem on its hands. The company is growing, but not nearly fast enough to satisfy its investors, who responded by selling off company shares in their droves earlier this week on the back of disappointing guidance.

On Monday, Rackspace posted revenues of $480.2 million for the first quarter, a 14.1 percent year-over-year increase. For the uninformed that sounds like pleasant news, but Rackspace’s shareholders it wasn’t nearly good enough – as a result, the company’s share price crashed by 13 percent on Monday afternoon.

What really riled the investors though was Rackspace’s earnings outlook for the coming quarter – the company said it expected growtrh of around 1.5 percent to 2.5 percent, which would mean revenues of between $487.4 million and $492 million. And that simply isn’t good enough, not when one compares the rocket-like growth of cloud rival Amazon Web Services (AWS), which recently declared revenue growth of 49 percent to $1.57 billion in its last quarter.

As Gavin Clarke in The Register notes, Rackspace and AWS are clearly on different playing fields, not least because Rackspace has declined to enter the savage price wars the latter is waging against heavyweights like Microsoft Azure. Instead, Rackspace has tried a different tactic, arguing the quality of its service far outweighs the cost savings of going with AWS or Azure. Rackspace offers “fanatical support” that AWS simply doesn’t provide, while providing its OnMetal servers – dedicated, single-tenant machines – to customers who need more cloudy firepower. But while “fanatical support” might appeal to some, the low price of AWS and other clouds is simply to good to ignore, which means Rackspace is losing out.

So what can Rackspace do to turn things around, without budging on its prices? The answer is to lend support to other clouds, and that’s exactly what the company’s CEO Taylor Rhodes said is his new priority on Monday.

Rather than getting embroiled in the price wars, Rhodes believes there’s an opportunity to “go leverage someone else’s product expertise and capital, and really differentiate on what makes us a specialist in our market”. Consequently, the firm has just announced its lending two levels of its “fanatical support” to Microsoft’s Office 365. It’s basic offering includes support, architecture, consulting, Exchange migration and tuning, while its Managed Services for Office 365 includes all this plus On-demand advice with a dedicated support team.

It remains to be seen if Rackspace’s idea of throwing its expertise around on other platforms will drum up the kind of profits Wall Street demands, but one thing is for sure – we can expect to see more of the same from Rackspace in the coming months as it looks for ways to satisfy its hungry investors.

“Assume that the launch of Office 365… is a good sign, in terms of our intent down these paths,” Rhodes said.

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