Rackspace pitches pricey private cloud

Hosting firm Rackspace has unveiled a "Private Cloud" service that allows users to rent a set of dedicated, physical servers and manage a VMware deployment through the company's MyRackspace.com portal. The company claims it is an "evolution " of it's dedicated virtual server (DVS) line.

Running only VMware virtualization software, the offering is a 180 degree turn from Rackspace's public cloud line, Cloud Servers and Cloud Files, which are open source, self-service and available to the public.

Early press releases from Rackspace said a minimum installation of eight virtual servers, which Rackspace says is covered by the same SLAs as regular physical hosting, starts at $6,000 per month, or $54,000 per year. That may seem like a steep premium when a VMware license could cost $3,500 per processor and a server capable of running eight VMs can be had for around $5,000.

If an enterprise can own a server and run VMware on it for the cost of a few months of the same service at Rackspace, then where's the advantage? Rackspace's CTO John Engates said that the cost comparison is the same as for traditional hosting.

"This is not a way to lower costs across the board," said Engates. "This is for real businesses with real needs," in contrast to public cloud options like Amazon EC2 or Rackspace Cloud Servers that are often touted as economical and are dribbled out by the hour. Rackspace is hoping to straddle the divide for enterprises between the attractive features of cloud computing, like self-service and automation, and the comforts of security and reliability that come with owning hardware.

"What we hear from a lot of enterprise customers is that they don't want to be 100% virtualized" and if they are going to host, they don't want to share, said Engate. Security and compliance concerns make multi-tenanted public clouds, where data storage is shared with others, a non-starter for many companies.

James Staten, principal analyst at Forrester Research, says there isn't much new to the technology but the packaging. Staten said that Rackspace's success with it's public cloud services was the real impetus behind the new product line.

"They realize that the value of the halo of 'cloud' that they've achieved" can be spread to other parts of their hosting lineup without too much investment, he said. Staten said the new Rackspace lineup was more of a new twist on existing managed hosting products rather than cloud computing. He said it was really a way for enterprises to get comfortable with the concept through Rackspace's web GUI and VMware automation tools.

"It may be more easily consumed by enterprises facing political challenges internally," he said, while preserving familiar models of IT investment in hosting. Staten said that larger organizations don't really want to turn their IT infrastructure on its ear, but they do want to experiment with the touted advantages of cloud, like flexibility and ease of use.

Rackspace's move is a trend for all hosting providers simply because of the ease and widespread availability of virtualization technology. Staten noted that if the prices don't change and you are still renting servers, with or without virtualization, the "cloud" aspect is in name only, but it is a step towards cloud computing in general for gun-shy enterprise customers.

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