Rackspace launches new business, hopes to build network of clouds around the world

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Source: Nils Geylen, via Flickr

Rackspace, one of the founders of OpenStack and a top cloud service provider, is branching out into a new business that could dramatically grow its reach around the globe.

The company plans to start building and maintaining cloud services on behalf of telcos and other types of service providers. Once built, the services will be linked together in a “global cloud of clouds” so that end users will get access to cloud services offered by any provider that is part of the new program around the globe, executives said.

“For many years at Rackspace we’ve been approached by telcos to help them build out hosting offerings and that seemed to accelerate when the cloud emerged,” said John Engates, CTO of Rackspace. “Once we got our OpenStack cloud up and running and hit our stride we started taking those requests more seriously.”

Rackspace didn’t name any customers of the program and would only say that it’s having “deep conversations” with potential customers, some of whom aren’t quite ready to talk, according to Scott Sanchez, director of strategy for private cloud at Rackspace.

When Rackspace signs up a new customer, it will start by telling the company what hardware they’ll need to build their data centers. “This will be their data center,” said Sanchez. Servers, power and networking are all the responsibility of the Rackspace customer. “They will touch them when they break,” he said, although Rackspace will provide operations training if the customer wants it.

“Then there’s a demarcation point between maintaining that physical gear with their people and operating it remotely with Rackspace people and technology,” he said.

The data centers will run Rackspace’s OpenStack implementation with all Rackspace components, such as monitoring tools. Rackspace will provide full operations of the cloud including 24/7 patching, monitoring and upgrading.

The setup, with a separate set of people managing the hardware and software, is much like the way Rackspace manages its own cloud, Sanchez said.

Rackspace then plans to link the clouds together on the backend. That means that a customer of one of the service providers can log into the service and “see all the other cloud partners that are linked and deploy workloads wherever they need to, however they need to without having to sign up with a new provider in a new country,” Sanchez said.

End users will pay for those services in their own currency and turn to their primary service provider for support.

If customers do hire Rackspace to design and maintain their clouds, Rackspace stands to benefit from ongoing fees as well as being able to offer the new cloud services to its own customers.

But it's uncertain just how many customers Rackspace will manage to sign up to the program. Telcos and other service providers will surely weigh the cost of hiring Rackspace for the long term against operating their own clouds, a decision they’ll look at in light of likely continued downward price pressure on cloud services.

For now, Rackspace is focusing only on allowing the clouds it maintains into the network. “We can guarantee an end-to-end set of service and performance levels,” Engates said. Accepting other clouds, especially those that don’t run OpenStack would make it more difficult to control, he said. “While that’s certainly something we’re not going to rule out, it’s also something that could be a challenge from a logistics standpoint,” he said.

Rackspace is also offering to help with marketing and support services. While incumbent telcos, which the executives highlighted as potential customers of the new program, have long experience marketing their own services, they are asking for help marketing new cloud services, Sanchez said.

In addition to telcos, Rackspace said that providers of services to certain verticals, like healthcare or government organizations, have also been asking for help. “There’s no reason why what we’ve built [at Rackspace] can’t be used by federal agencies, except that they aren’t guarded by guys with M16s,” Sanchez said. In other words, a service provider that targets federal agencies could hire Rackspace to build its cloud and then add their own layers of security in order to comply with rules that govern federal cloud users.

Businesses catering to financial services, which sometimes require data centers be located in a certain proximity, could also be interested in the new program, as well as providers serving customers that require a data center in-country.

Rackspace has talked to potential customers all over the globe, including the U.S., the executives said.

Rackspace isn’t the only choice that service providers have for this kind of service. The executives criticized system integrators or other vendors that might offer to help with building a cloud. “This is very different than what a hardware company or integrator might do when they drop off a truckload of hardware and then leave, or build you out a spec cloud and then leave,” said Sanchez.

CloudScaling is one company that offers an OpenStack implementation for service providers, as well as services to help them build and maintain the implementation. In 2010, IBM launched a program to help build and operate clouds for telcos.

Enomaly, a company since purchased by Virtustream, pioneered the cloud marketplace concept, focusing on helping service providers that use its software find users for unused cloud time. Virtustream said it still maintains the marketplace.

Rackspace is making the announcement just as the annual OpenStack Summit kicks off in Portland, Oregon.

Read more of Nancy Gohring's "To the Cloud" blog and follow the latest IT news at ITworld. Follow Nancy on Twitter at @ngohring. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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