A Fortune 50 business executive had a Web project going. Or rather, not going. His company's IT department didn't have time to hook up a Web server.
The exec got exasperated, and called Rackspace.com. His project was online by close of business that day.
Graham Weston, CEO of San Antonio-based Rackspace, says he can't identify the executive, but it's certainly a familiar story. It's also a story tailor-made to illustrate the knight-in-shining-armor role he says Rackspace plays.
Speed and flexibility in Web server deployment are key Rackspace selling points. The company appears to be a good bet as a Web server outsourcer in its intended market - small to midsize businesses - but it may have a place serving large information technology organizations as well.
The idea: Businesses that need a Web server quickly can call Rackspace or hit the company's Web site, www.rackspace.com, and roll their own. At the Web site, you can spec out your operating system, processors, memory, bandwidth and support needs. Then you can instantly check out lease rates. Rackspace.com views this as a differentiator. "We're trying to productize this [process]," Weston says. "This is not a consultancy."
Indeed, competitors such as Beltsville, Md.-based Digex Inc. and Andover, Mass.-based NaviSite Inc. don't quote prices online. But they offer a broader range of services - including application hosting and co-location - in addition to Web server outsourcing.
According to Cambridge, Mass.-based Forrester Research Inc., Rackspace.com's slice of the Web hosting market was about $152 million at the end of 1998 and will grow to about $5.3 billion in 2003.
Richard Yoo, Rackspace.'s co-founder and chief technology officer, says the company viewed top-notch equipment as a cost of entry.
Rackspace offers redundant network connectivity as well as Cisco Systems Inc. networking gear and Sun Microsystems Inc. hardware. It supports Solaris, Linux, Windows NT and Cobalt. Linux is its specialty.
Yoo says one frequently asked question is: How does Web server outsourcing differ from co-location? George Peabody, an analyst at Aberdeen Group Inc., says co-location vendors such as Santa Clara, Calif.-based Exodus Communications Inc. have "got a network, and they're leasing out well-connected physical space." Increasingly, Exodus is offering services as well - and it's reasonable to expect others to elbow into Rackspace.com's area. "The large guys are going to go downmarket toward them," Peabody says.
But for now, analysts say Rackspace.com stands out by offering notable service at a low price. Rackspace.com customers' average monthly tariff is between $500 and $1,500, Weston says.
"Service at those price levels is a differentiator," Peabody says. He says Rackspace.com boasts significant "operating system-level expertise ... good network design and a good methodology for the care and feeding of servers."
Service Comes First
Service was the convincer for Formula1.com. The London-based auto-racing Web site was looking for three things in a Web server outsourcer, according to CEO Nicky Morris. First, the company needed reliable uptime. Second, the price had to be attractive. Finally, quick turnaround on requests for additional boxes was vital.
The third criterion was the persuader because Formula1.com ramps up and down quickly. "Rackspace can turn around a new order for a Linux box to our specifications within 24 hours," Morris says.
Another frequently asked question: Do I get admin access to my server? "Yes, they get complete root access," Yoo says. "They can erase a drive if they want."
Rackspace.com may be on to an interesting idea for midsize companies. If your business is large, its service isn't, for the most part, aimed at you.
"The Fortune 100 is not their market," Peabody adds. However, he says, "they'll have Fortune 100 data on their servers" because many systems integrators outsource to Rackspace.
And even Weston concedes that "co-location is great for folks who have a very large site and an administrator to run it."
Peabody says he believes that the corporate need to work at Internet speeds may be Rackspace.com's ally. "If your IT folks are jammed," he says, "you can't afford to wait. The Net beats a relentless drum."