Fanatical support specialist Rackspace Inc. has confirmed rumors that first emerged last week, announcing it will now sell and support Amazon Web Services’ cloud, in a similar deal to what it previously inked with Microsoft.
On Tuesday at AWS re:Invent, Rackspace launched Fanatical Support for AWS, beginning with U.S.-based customers. Non-U.S. customers will have to wait a while, although Rackspace will offer support for them in beta mode. In addition, Rackspace will also resell and offer support services for AWS’s elastic cloud as it’s now officially become an authorized AWS reseller.
The deal follows on from a similar agreement Rackspace struck with Microsoft to support and resell its Azure cloud. Under that partnership, Rackspace offers its fanatical support 24/7, 365 days a year.
More significantly perhaps, the deal underscores the strategic about-turn Rackspace has performed in the last few months, as the company struggles with poor financial results and declining growth in its own cloud operations. Five years ago, Rackspace’s original plan was to compete directly with AWS and Microsoft’s proprietary clouds by pushing development of the open-source OpenStack project. That platform was supposed to help Rackspace become a major cloud player, but due in part to AWS’ and Microsoft’s massive financial power, the results were less than hoped for.
The move also raises question marks over the long term prospects of OpenStack. Although there are a number of companies running OpenStack clouds, they’re more of a niche set up, popular only for private use or as a regional service provider. We’re yet to see an OpenStack cloud rise up to the scale of AWS, which leaves just Microsoft’s Azure and Google’s Compute Engine as the main alternatives.
This failure has impacted Rackspace’s growth to the point where last year, it was widely reported to be contemplating a merger or acquisition by a larger firm. That didn’t materialize and instead it brought in Taylor Rhodes as its new CEO, with the idea of focusing on support for the big boys clouds instead.
Whether or not Rackspace’s move to support AWS will make any difference to its bottom line remains to be seen. Jonathan Schildkraut, an analyst with the investment banking advisory firm Evercore ISI, told TechTraderDaily last week that he was doubtful it would, because most leading providers in the space are only generating revenues of $100 million a year, compared to the current $2 billion-plus Rackspace already generates.
“Thus, even if Rackspace were successful in building a market position, the new strategic direction is unlikely to reverse its decelerating top- line growth any time soon,” Schildkraut concluded.
Digging into the details of the deal, Rackspace says it’s offering two levels of support: Navigator, which allows customers to retain control over their AWS clouds; and Aviator, for those who’d rather let Rackspace do everything. The offerings include managed security with host and network-level threat detection, plus Compliance Assistance for customers in the Payment Card and similar industries. It’s also offering Adobe Experience support for digital marketing. The company has yet to provide details of future support options it’s planning.
“Launching our new business unit and adding AWS support to our portfolio of managed service offerings enables us to give our customers more choice in their infrastructure deployments,” said Rackspace senior vice president Chris Cochran in a statement. “Fanatical Support and the AWS Cloud are a potent combination; we’re thrilled to now make it available.”