So much for wishful thinking. Amazon.com
But expanded basic support isn't the real worry. What is? Lower prices for top-tier support; Amazon has rebranded and reduced fees for its most expensive service levels. Now called "business" and "enterprise," the e-tailer will bill based on usage rather than a flat 10% fee as it has in years past.
Rackspace investors appear unnerved by the moves, especially now that NASA has announced plans to move some of its infrastructure from OpenStack -- a standard it helped to create -- to AWS. Rackspace is in the process of transitioning its internal infrastructure to OpenStack.
Amazon's aggressiveness coupled with NASA's flailing commitment to OpenStack has investors nervous; the stock is off about 7% in a week that's seen the S&P 500 rally more than 1.5%.
Is selling the right reaction? I don't think so. In fact, there's actually some good news if you read between the lines on the changes. Amazon in January introduced a service it calls "Trusted Advisor" for top AWS customers whereby consultants proactively recommend ways to save money, close security holes, and improve overall performance.
Today, only the top two of the four tiers of AWS support -- "business" and "enterprise" -- are granted access to the "Trusted Advisor" program. Not so at Rackspace. Fanatical Support means every account gets the sort of high-touch proactive service that only the most premium AWS customers receive today.
Or at least that's how I read the terms. If I'm wrong, we'll see Rackspace churn -- i.e., a measure of customer turnover -- rise as clients leave for AWS or AT&T
History says there won't be much impact. Rackspace has spent more than a decade fighting off intense competition. In the past five quarters alone -- as hosting has become more important with the rise of cloud computing -- churn has run negative as customers have stayed loyal. I expect they'll continue to.
Cloudy with a chance of millions
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