How Rackspace Can Turn It Around

Rackspace reported their first quarter earnings Wednesday, and the market did not like what it reported.  At market close Thursday, the stock had suffered nearly a 25% loss.  At the same time, there was some good news in that revenue is up 20%.

Hollow Developers has always been a great fan of Rackspace, and we use their cloud server products as our failover systems.  However, we were forced to other cloud server providers for our everyday hosting needs primarily due to cost.  Amazon Web Services (AWS) has the hefty weight of Amazon behind it, allowing AWS to adopt Amazon’s aggressive pricing models, undercutting prices of competitors by a fairly substantial margin.  There has always been a premium cost to do business with Rackspace, and this premium is definitely worth it for their ‘fanatical’ customer service.  However, there are some businesses that cannot afford that premium, or don’t depend on the customer service enough in order to rationalize paying the premium.  In our case, interaction with customer service is so limited that a monthly premium doesn’t make sense.

So, how does Rackspace turn things around?

First, place benchmarks on their cloud servers instead of relying on third-party websites to compare their CPUs against Amazon’s.  In our experience, AWS virtual machines don’t have the CPU horsepower that some would expect.  If Rackspace doesn’t exceed Amazon’s performance for comparably priced servers, bump up virtual machine resources until they do.  This metric is the most important for many websites that rely heavily on dynamic pages, and can become a deciding factor in choosing one service over another.  It is not immediately apparent that Rackspace’s entry-level server actually outperforms Amazon’s closest alternative when comparing CPU and price.

Second, allow more administrative actions to be performed via the Rackspace control panel.  A Scalr-like setup for auto-scaling and easier cross-region deployments would be a huge value-add to the product.  With Scalr running $100/month, some basic built-in scaling could be a deciding factor in using Rackspace versus a competitor.  Alternatively, partner with Scalr to provide some sort of discount to the service.  Rackspace customers already receive discounts at a number of other websites, and placing a cheaper Scalr monthly cost on to the table may be a deciding factor for those wanting to grow their cloud footprint.

Finally, take a page out of Amazon’s book and add a free or nearly-free tier to Cloud Servers.  Allowing people to sample the product, even for a few months, would invariably lead to some people remaining on the platform instead of seeking out competitors.  Pairing this with a Scalr partnership would make Rackspace that much more attractive.

Surely, there are other things that Rackspace could do to regain the confidence of investors, but these seem to be the most important among small businesses with small but expanding cloud footprints like ours.

* Disclaimer – Hollow Developers is a small investor, customer, and former affiliate of Rackspace.

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GoDaddy Instant DataCenter vs. Rackspace Cloud Servers Part 2

Last year, we posted about GoDaddy’s alternative to Rackspace’s cloud servers.  We delivered a mixed verdict on both products, siding with GoDaddy primarily for price and ease of use, while Rackspace won the reputation, documentation, and API control.

Starting today, however, we can definitely recommend Rackspace over GoDaddy.  Not only for their SOPA stance, or hours-long outage a while ago, but due to the fact that they are shutting down the product.  It was a great step for beginners into the world of cloud computing, but it seems that their low price and tarnished reputation drove them out of the market.  In a memo that we received late last week, the company announced that Cloud Servers would be discontinued, giving customers until mid-April 2013 to move away from the platform.

As a rule, Hollow Developers always maintains our primary servers on one web host in one city, as well as backup servers on a different web host in a different city.  Every provider is going to experience downtime, and we want to make sure that we are always online.  Look forward to another host vs. Rackspace article in the near future, as we move our servers away from GoDaddy and find a new home.

Here is the bulk of GoDaddy’s memo to existing customers:

Go Daddy appreciates your business with us – we know you have many choices when choosing a business partner online. We continually strive to deliver you the best products and the best support in the industry. After careful review, we have decided that the best way to bring cloud hosting to our customers is by integrating it with our Web Hosting and Virtual Private Server products. As such, we will be discontinuing Cloud Servers as a stand-alone product.

We know you have invested your time building your business on top of our Cloud Servers product, and we want to work with you to take the next step. We will be giving our Cloud Server customers until April 15, 2013 to migrate their data and processes to a new platform.

Our customer care representatives will be reaching out to you over the next week to help you make this transition. We have several alternative products to meet your hosting needs, including:

• VPS (Virtual Private Servers) offer flexible capacity with guaranteed RAM and storage availability.

• Dedicated Server plans that give you your own lightning-fast processor, up to core i7, with up to 20TB of bandwidth.

• Go Daddy Web hosting is an option for those who need reliable hosting in a clustered, multi-server environment.

If you are still interested in GoDaddy, they still offer some products – find out more about their Dedicated Servers at GoDaddy.com.

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GoDaddy Instant DataCenter vs. Rackspace Cloud Servers

10/09/2012 Update

We have written in the past about Rackspace Cloud servers, and the fact that our site is actually built on these servers.  As traffic increases and decreases, we can quickly scale up and down our servers to accommodate spikes, and remove cost during slow periods.

Recently, GoDaddy introduced their answer to Rackspace’s cloud servers – GoDaddy Instant DataCenter.

We haven’t had much time with GoDaddy’s product, but wanted to provide some initial thoughts on the two products since there doesn’t seem to be much discussion on the products yet.

First, the areas where GoDaddy wins out over Rackspace:

  • Price – as usual, GoDaddy undercuts the competition by a significant margin.  Three 1GB servers with 100GB outbound transfer will run you $120/month (cheaper if you signup for a longer term).  Comparable servers on Rackspace would cost $150/month.
  • Ease of setup – we called GoDaddy support and had a running server within 2 hours.  Setup time was comparable on Rackspace.  However, GoDaddy provided a stock LAMP Ubuntu server, something that saves just a little time, but is helpful nonetheless for quick proof-of-concepts.
  • Easy firewall – GoDaddy provides a firewall in front of your entire network, so you can use their interface to open ports and establish load balancers.  Rackspace doesn’t let you off quite this easy and requires modifications on each server.
  • Simple load balancer – in the control panel, you tell GoDaddy which port and IP should be load balanced, and also provide target machines – all in a web interface.  Nothing’s easier, and this layer is free.  I would like more details about the load balancer, however.  I am assuming that it is a high availability load balancer with many nodes at the entrance of the network.  You know what they say about assuming, though.

Rackspace has quite a few things going for them, however:

  • API Control – Scripts can easily control your cloud server settings – everything from creating a new server instance to increasing the RAM on a server.  This allows you unparalleled flexibility, and is not, as of yet, available on the GoDaddy Instant DataCenter product.
  • Reputation – A huge plus for Rackspace here.  I don’t know anyone who can say “I’m really embarrassed that I buy products from Rackspace.”  However, the same cannot be said for GoDaddy.  From their icky advertising to their CEO’s elephant killing video, the company is a little sketchy.  Every SuperBowl, I hang my head in shame when their commercial comes on.
  • Documentation – Rackspace wins by a mile with best practices for setting up the servers and step-by-step instructions for performing almost any task that you will need to do.  It’s still early in GoDaddy’s product, but even for their older products, GoDaddy lacks solid documentation and a strong community.
  • Easy CDN Integration – Content delivery network is provided in the control panel to allow quick offloading of resources.
The verdict: mixed.  If you’re just trying things out, you might want to give GoDaddy a try since they seem to be the cheapest option for 1GB servers.  However, Rackspace allows you to start at 256MB, so their cheapest option is also a good starting point.  If you require a more complex setup, I would definitely go with Rackspace due to their flexibility and API integration.

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Rackspace Cloud Load Balancing

At Hollow Developers, we use Rackspace Cloud for this website, and have started to move over our gaming and education websites to this host.  Today, they have announced public availability of their Rackspace Cloud Load Balancing API.  We have been waiting for this since November when they first announced a public beta, and are even more excited about what this means for our clients in the future.

What is Load Balancing?

Load balancing allows websites to split up the work of hosting pages and images to multiple machines.  Take a site like Amazon.  There’s no way that one server would be able to keep up with all those visitors!  So, Amazon tells some of its customers to use Server A, and some of its customers to use Server B (in reality, there’s probably thousands of machines at Amazon).

There are a few benefits to this.  First, with multiple machines, you have redundancy – your data is stored in multiple locations, and in case one server goes down, your website can still stay online.  Second, suppose one server is being overloaded with a very complex request.  With load balancing, the other server can pick up the slack until the resource-intensive task is complete.  Load balancing also allows you to take servers out of the rotation and perform maintenance, without bringing down your website.  The wikipedia article has a long list of other benefits.

Load Balancing For Small Businesses

In the past, load balancing has been out of reach for many small businesses.  If  your dedicated server that hosted your website went down, your customers would be met with a dreaded 404 page.  However, with load balancing coming soon to the Rackspace Cloud Control Panel, this is going to get much easier very soon.  Starting at $20/month, Rackspace’s solution is poised to be one of the first easy-to-use and inexpensive cloud load balancers.

Interested in getting your site on Rackspace Cloud?  Contact Hollow Developers for a consultation.

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