February 5th, 2013 by Jeremy Sherwood, Cloud Strategist
Rackspace verses Terremark, Fight 2 for the UCC (Ultimate Cloud Championship). In the first fight, we saw the two heavyweights: AWS and Google App Engine. This fight card is the middleweight class. You have 2 really similar companies with similar origins and backgrounds. Hosting.
Rackspace’s real roots date back to 1996 when Richard Yoo started a small ISP called Cymitar Network Systems out of his garage apartment in San Antonio, Texas. The company quickly began doing application development work, in addition to offering basic Internet access and web hosting. Although the founders of Rackspace began as application developers for end-users, they found that most companies didn’t know how to host their applications, or didn’t want to be involved in the hosting. In the words of Bigweld for Robots, “See a need, fill a need.” For the Rackspace founders, this meant time to shift business models and make some money with a new company. Rackspace was launched in October 1998.
Terremark has a similar story. According to Wikipedia, “In 1980, Manny Medina incorporated Terremark as a real estate company constructing office buildings. During the dot-com era, more and more of his buildings were leased to computer data centers and the company morphed into an information technology services company, starting with the NAP of the Americas, Terremark’s flagship facility, in downtown Miami. NAP of the Americas became one of the most significant telecommunications projects in the world. The facility was the first purpose-built, carrier-neutral network access point (NAP) and is the only facility of its kind specifically designed to link Latin America with the rest of the world. The building is a 750,000 square foot, purpose-built data center. The equipment floors are 32 feet above sea level. The building is designed to withstand a Category 5 hurricane with approximately 19 million pounds of concrete roof ballast. It has 7 inch thick steel reinforced concrete exterior panels. NAP of the Americas carries 95% of the data traffic between North and South America.”
Coming from the data center space myself, I can see the smooth transition from a data center company to a hosting/cloud company, when you have a DCIM (Data Center Infrastructure Management) background. On January 27, 2011 things changed for Terremark when Verizon Communications purchased the worldwide company for $1.4 Billion. This event has only sped up the cloud training and experience of Terremark.
With the history lesson now behind us, these two cloud fighters come to battle for the middleweight title of cloud computing. If you look at the Gartner Magic Quadrant you see both of them leading in their class and space.
Terremark is trying to chase down AWS in the leader’s quadrant and Rackspace is leading in the visionary quadrant.
Terremark’s strengths come by leveraging its parent company’s data centers (13 data centers throughout the world), cloud and security businesses, as well as its enterprise cloud VMware offerings. Terremark has a good foothold on its managed and public sector clouds, which will only strengthen its position. According to Gartner, as of October 2012 Terremark was the market-share leader in VMware IaaS (Infrastructure as a Service) cloud offerings.
Terremark has a few weaknesses in my opinion. The biggest concern I have is with the leadership changes in the company. Since the Verizon takeover there has been two president changes in less than one year since Medina left the company at time of acquisition. Currently, there are 3 executives running the company. So I question whether the long term vision and strategy that led them to such success is still there and where the new leadership will take them.
Rackspace offers a cookie cutter approach to their offerings. A fixed-size, paid-by-the-VM, Xen-virtualized public cloud IaaS solution. And of course, you can add optional managed services (Fanatical Support included). Although Rackspace doesn’t have 13 data centers world wide and the backing of Verzion, what it does have is its extensive partner network. Rackspace has a great integrated content delivery network with Akamai, which provides Database-as-a-Service and PaaS. Rackspace has one other nice left hook in its bag of tricks. As the founder of the open-source cloud management platform OpenStack, it is a driving force to reckon with. Currently, over 6,695 people and 87 countries using the platform is something to be concerned about if you’re Terremark.
Rackspace also has a few things to be cautious about as well. The future of OpenStack’s emerging technology is unclear when you have competition from Apache’s competing CloudStack platform, which is well supported by heavy hitters like VMware, XenServer, KVM, and Xen Cloud Platform Hypervisors. I also wonder about not having the same backing as Verizon and their telecommunications network that Terremark has in its corner.
The winner of this fight will really come down to execution over the next couple of years. Does Verizon/Terremark buy up other companies to grab market share and expand their portfolio of services? Does Rackspace push OpenStack as the leading and only cloud adoption platform for cloud interoperability? What happens next and the outcome of the Ultimate Cloud Championship all will happen soon. I know I will be watching and judging each move and position as each battles for cloud dominance. ScienceLogic will be monitoring them. 4 Cloud providers down. Who’s on the fight card next… Is it your cloud company?