Rackspace and HPE Will Sell On-Prem Private Cloud as a Service update from November 2017

Rackspace and Hewlett Packard Enterprise have partnered on a new managed private cloud service for enterprises – a pay-as-you-go OpenStack cloud customers can have in their own data centers, in colocation facilities of their choice, or in Rackspace data centers.

The service will compete with on-premises cloud infrastructure offerings the largest public cloud providers have been rolling out lately, such as Microsoft’s Azure Stack, Oracle’s Cloud at Customer, and the on-premises Google cloud stack Cisco and Google are planning to bring to market.

A Rackspace spokesperson said Rackspace and HPE are planning to launch similar on-prem services for VMware and Azure Stack next year. HPE is one of Microsoft’s hardware partners for Azure Stack, while Rackspace’s core business is providing managed cloud services for the likes of Azure and Google Cloud.

Scott Crenshaw, executive VP of private cloud at Rackspace, said the new service, available toward the end of this month, will allow enterprises to grow their server and storage needs and handle bursts in workloads without having to pay the upfront equipment cost.

HPE will provide the hardware, including its Gen10 servers, and hardware support, while Rackspace will manage the private clouds for enterprises, he said.

“Traditionally with private cloud customers would have to plan the capacity out and commit to a certain level of capacity,” Crenshaw said. “This allows customers to buy the (private) cloud like they do the public cloud – by the VM (virtual machine) hour or the gigabyte hour, so they can pay-as-you-go and scale instantly.”

Michelle Bailey, group VP, general manager, and research fellow at IDC Research, said the partnership is a win-win for both companies.

Today, enterprises spend 10 to 20 percent of their IT investments on private cloud technologies, so it’s a great opportunity for both companies, she said.

HPE has a large installed base of enterprise customers, and as these customers decide to invest in private cloud capabilities, they need help managing that complex environment, and that’s where Rackspace comes in.

“HPE needs a strong services arm around cloud, and because a lot of this technology is built around OpenStack, they need someone like Rackspace, which has a lot developers and operators that are experienced around OpenStack,” Bailey said.

In return Rackspace gets to sell to HPE’s customers, she said.  “Rackspace is traditionally strong in the midmarket and smaller customers, and this gives them access to sell to HPE’s large installed base of enterprises.”

The new managed service, called OpenStack Private Cloud with pay-per-use infrastructure, gives enterprises the benefits of the private and public cloud, Crenshaw said.

Rather than take weeks or months to build new capacity, customers can increase server or storage capacity within seconds like they can in the public cloud, he said. Furthermore, they get the benefits of the private cloud, such as a single-tenant environment and better performance, control, and security, he said.

The new offering is ideal for enterprises, like those in the oil and gas industry, that need to take advantage of machine learning and data analytics and have big bursts in workloads once a week or month, Crenshaw said. The service will also benefit retail companies that have seasonal spikes in sales, he added.