Rackspace is a hosting company founded in 1998 with headquarters in San Antonio, TX. It employs over 4,000 employees worldwide and serves over 190,000 business customers. Rackspace revenue grew from $629 million in 2009 to over $1 billion in 2011, and the company focuses on building customer loyalty through its Fanatical Support. Rackspace competes against companies like Amazon, Red Hat, IBM, and Google in the cloud hosting market.

1. Rackspace
Hosting, Inc.
By: Rita Seaton

2. • Headquarters – San Antonio, TX
• Founded 1998
• Employs over 4000 “rackers” world-wide
• NYSE – RAX
• Vision – to be one of the world’s best service companies
((Yahoo! - ABC News Network, 2012)
• Core Competency
• Best in class customer support
• Open IaaS and PaaS in the cloud
Company Description

3. – 2009 - $629 million
– 2010 - $780.6 million
– 2011 - $1,025.1 million
– 2012 - TBD
Company Revenue

4. • Growth Drivers:
– New customers
– Recurring customers
– Other cloud computing services acquired through
R&D and acquisitions
• Growth metrics
– Based on the number of installations (existing
customers)
Company Description

5. • As of 12/31/2010
• Serves over 120 countries
• Serves over 197,000 business customers worldwide
• Manages over 90,000 servers from data centers in Europe,
Asia and North America
• 2,100,000 e-mail accounts
• 417,000 cloud hosting domains
• Enterprise Products
• Rackconnect that integrates Rackspace Cloud and dedicated
hosting services.
• Critical Sites service level that monitors mission-critical
customer data
Company Description

6. • Subscription-based
• Recurring fee based on complexity of system and level of
service
• Pay as you go public cloud services
• 98% of our revenue on a recurring basis
Current Business Model

7. • Provides managed hosting, email and applications and cloud hosting
services
• Provides superior customer service using their Fanatical Support®
brand
• philosophy to go above and beyond customers' expectations
• In 2013, building their own open, cloud-dedicated servers that others
can also get
• Provides highly-customized hosting environments (e.g. SharePoint)
• Provides quick and efficient turnaround
• 100% uptime
• Delivery on-demand IT infrastructure in the cloud
• Uses OpenStack, an open-source framework for delivering cloud
computing technology
• Strategy to create a cloud operating system that can run anywhere,
gives freedom and choice, drives unconstrained innovation
(McCarthy, 2012)
• Requires massive technological expertise
Current Business Model

8. • Focus on building promoters with employees and customers through
their Net promoter System With employees, how?
• Identify strengths or natural talents
• Give people an opportunity to grow their own way
• Nurture them to maturity
• Focus on retaining talent
• As Wayne Roberts of Rackspace described it:
“Each person is unique and I am fascinated by that uniqueness and how to get the most
out of their talents. What “ingredients” (Strengths and Talents) do they possess, how do
you draw out some of those “ingredients” (Unlock their passions), maybe add a little spice
or ingredient modification (Learning and Development), mix (Leadership) and then bake
(Experience) at the right temperature (Leadership and Culture)….So, think of people as
casseroles and what they are, rather than what they aren’t. Accentuate those ingredients.
And maybe help them add a little something when necessary. But never over-power the
core ingredients. You won’t like the taste and no amount of baking will fix it…And if they
are a broccoli rice casserole, then find the role in your organization where that dish is best
served.”
(Roberts, 2010)
Management Philosophy

9. • Amazon (AMZN): Who likes to give away products and
services at a loss to sell more consumer goods.
• Red Hat (RHT): Focused on open source
technology, including the cloud.
• IBM (IBM): Intent on becoming a bigger player in the
cloud (but we think is a prime candidate to acquire
Rackspace).
• Google (GOOG): Using their data center scale to offer
platform-as-a-service. Vmware AWS
Major Competitors

10. • Who are they?
• Customers of any size that need:
• eCommerce
• SaaS
• Mobile and Hybrid Applications
• Integrated and dedicated infrastructure
• How many?
• Over 190,000 customers worldwide
• Expanding monthly
Customer Base

11. • Using the Net Promoter® system, customers help
advertise (Bain Insights, 2012)
• Hire Cloud Evangelists (Rackspace, 2012)
• Press Releases (Internet)
• Events
• Social Networks (FB, Twitter, LinkedIn)
• Channel Partners
• Pay-per-click on search engines
Advertising and
Marketing Methods

12. • Upstream
• HP and Dell build servers for Rackspace (currently)
• Rackspace to start building their own server – 2013
• Open Compute Project suppliers
• Downstream
• Service and Technology Partners Advertising Agencies
• CMS Providers
• IT Consultants
• Web Designers/Developers
• Systems Integrators
• eCommerce Providers
• MSPs
• VARs
• And more
Major Supply Chain

13. • Diversification
• Overcoming outages
• Monitoring return on capital
Potential Strategic Areas
for Improvement

14. • Bain Insights. (2012, September 20). How Rackspace Turns Customers Into Brand Fanatics.
Retrieved from Forbes: http://www.forbes.com/sites/baininsights/2012/09/20/how-
rackspace-turns-customers-into-brand-fanatics/
• McCarthy, J. (2012, August 7). Rackspace Racks Up Customers, Posts Q2 Gains. Retrieved
from UBM Technologies: http://www.crn.com/news/cloud/240005127/rackspace-racks-up-
customers-posts-q2-gains.htm
• Roberts, W. (2010, June 8). Talent Casseroles. Retrieved from Rackspace:
http://rackertalent.com/strengths/talent-casseroles/
• Rackspace. (2012, December 17). Racker Talent. Retrieved from Rackspace:
http://jobs.rackspace.com/job/San-Antonio-Cloud-Evangelist-US-Job-TX-78201/2337480/
• Rackspace. (n.d.). Rackspace Home. Retrieved January 28, 2013, from Rackspace:
http://www.rackspace.com
• Yahoo! - ABC News Network. (2012, February 12). Form 10-K for RACKSPACE
HOSTING, INC. . Retrieved from Yahoo Finance Annual Report:
http://biz.yahoo.com/e/120217/rax10-k.html
References