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Rackspace: Amazon? Sure, you can buy their cloud ... from us

Hosting firm will offer cloud management on top of AWS, report claims

By Neil McAllister in San Francisco

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Rackspace has reportedly formed a partnership with Amazon Web Services to help customers move their data centers to the online retail giant's public cloud.

According to a report in the Wall Street Journal, an American financial newspaper, the two companies plan to announce their new relationship at Amazon's AWS:reinvent conference in Las Vegas next week.

If the reported deal is anything like the one Rackspace struck with Microsoft in July, it will involve Rackspace acting as a reseller and support source for Amazon Web Services, in addition to offering hosting options in its own data centers.

Until recently, Rackspace entertained ambitious public cloud aspirations of its own. But with the likes of Amazon, Microsoft, and Google literally spending billions each quarter to build out their cloud data centers, the plucky upstart appears to have done a rethink about its role in the future cloudy world.

In Rackspace's most recent earnings report, CEO Taylor Rhodes – who moved into the corner office a year ago – admitted that his goal of expanding the company's public cloud revenues "has not been fulfilled," and that Rackspace's public cloud growth had "remained slow throughout the quarter."

Founded as a hosting company in 1998, Rackspace has been rapidly outpaced in the cloud market by its larger competitors. AWS, for example, only sprang to life in 2006, yet it pulled in 3.7 times as much revenue in its most recent quarter than Rackspace did, not including any of Amazon's retail operations.

Speaking at an event in London in June, Rackspace CTO John Engates said the company sees a future in offering cloud management services, even if it's on top of other companies' clouds.

"When you start to blend Rackspace's services and support into the mix, and those things become a bigger and bigger proportion of the check that our customers write us every month, the penny or two of infrastructure difference fades into the background," Engates said.

That "managed cloud" concept has become something of a theme for Rackspace. Around this time last year, Rhodes said, "We're targeting businesses and developers who want to tap the power of the cloud without the pain of running everything themselves – and the expense of recruiting or contracting with experts in dozens of complex technologies."

Neither Rackspace nor Amazon would comment on the WSJ's report. ®

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