In Cloud Wars, Don't Forget No. 2 Rackspace

Rackspace is in the mix of cloud pricing war

Apr 3, 2014 at 1:00PM

WinterThis story originally written by Nancy Gohring at CITEworld. Sign up for our free newsletter here.

With the cloud pricing war taking place over the last week, you'd be forgiven for thinking that Amazon, Microsoft and Google (NASDAQ:GOOGL) (NASDAQ:GOOG) are the top cloud providers. But a report out this morning from RightScale throws another vendor in the mix: Rackspace (NYSE:RAX).

In RightScale's annual State of the Cloud Survey, the company surveyed more than 1,000 businesses and found that Rackspace was the second most used cloud, behind Amazon Web Services. Google App Engine, a platform as a service, comes in third.

Don't miss: In defense of higher cloud prices

However, what's notable about the survey is that around 80 percent of respondents are small and medium businesses. In addition to the overall ranking, Rightscale breaks out usage by enterprise or small and medium business.

Those results show that Rackspace and Google rank lower among enterprises. They'll need to figure out how to attract enterprise users, which tend to generate more revenue, if they want to stay competitive.

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Source: RightScale

Among enterprises, RightScale found that AWS is the most used followed by VMware vCHS. However, RightScale cautions that VMware vCHS, the public VMware cloud offered by VMware, hasn't been out that long and, based on follow up interviews, RightScale found that respondents were likely confused and in many cases aren't actually using the service.

Azure came in third and fourth place with its PaaS and IaaS with Rackspace in fifth and Google App Engine next. Google's infrastructure service was ranked eighth.

Among enterprises, the rankings make sense. Many businesses have long relationships with Microsoft and so turning to Azure may seem more logical for running important enterprise apps than Google.

Rackspace has been working hard to try to attract enterprises but has long been known as a provider suited to smaller businesses. While it's doing better than Google in attracting enterprise buyers, the RightScale survey indicates that enterprises may be more interested in Google than Rackspace. Seventeen percent of the enterprise respondents said that they are experimenting with Google's infrastructure service, compared to 14 percent experimenting with Rackspace. Twelve percent said they plan to use Google's infrastructure service compared to 11 percent who plan on using Rackspace.

Service providers like Rackspace and Google face a challenge getting into the enterprise but it's not insurmountable. After all, Amazon is traditionally a consumer company but managed to secure 49 percent of live apps among enterprises in the RightScale survey.

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CITEworld has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and Rackspace Hosting. The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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