Rackspace building a future in cloud in APAC

Adrian Ho/Ovum
12 Aug 2014

The public cloud market in Asia-Pacific has been getting crowded over the last 12 months, with all the major players building or expanding their presence in the region. Datac enter capacity has surged, with leading cloud providers such as AWS, IBM, and Microsoft building their cloud capacity in major cities.

This tussle has resulted in heavy price cuts, with margins being reduced to almost bare bones. Rackspace has been tactically astute in its strategy in the region: by deciding to almost completely avoid this price war it has carved itself a role as the “support and managed services” cloud provider.

It recognizes that it does not have the scale or resources to challenge the big players globally, and has therefore avoided the strategy of almost unconditional expansion of datacenters in favor of a more balanced approach.

Cautiously building a presence in Asia-Pacific

Rackspace has quietly built its cloud business in the region out of its datacenters in Hong Kong and Australia, and its immediate- and mid-term plan is to further expand its capacity in both countries.

Although the competitive landscape in Australia is tough, there is still room to grow. Rackspace believes that Australian organizations are mature in their selection of cloud service providers, and value support over pure price considerations when selecting a supplier.

The majority of Rackspace’s business in Australia comes from the mid-market segment, in particular enterprises with mission-critical websites, and it has built a channel ecosystem that focuses on this segment. It is currently reviewing its options to tackle the large-enterprise market, a segment it believes is well covered by the larger players.

Rackspace’s Hong Kong operation currently services enterprises moving into China; Indian companies (mainly SIs) account for almost 40% of that business. It is looking into the viability of building datacenters in Singapore and Japan – both markets are targets for global players.

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