Quick Query: Rackspace Executive on Hosting Trends

John Engates is chief technology officer for Rackspace, a preeminent hosting company. Rackspace was launched in San Antonio in 1996 and now, in 2009, the company’s stock is publicly traded. Rackspace’s 2008 revenues exceeded $500 million and they have data centers located around the globe. In this Quick Query, Engates discusses cloud computing and other hosting trends.

PeC: How do you think the hosting landscape will change over the next five years?

Engates: I think that we’ll see a lot of new ways to break into the market. We’ll see new technologies, new players, and new vendors coming into the marketplace. Cloud computing is changing the landscape in a big way. The emergence of virtualization and cloud computing are making access to technology more accessible to small businesses. The cost of getting in to an entry level ecommerce infrastructure is going to become dramatically less expensive. Things like hosting platforms that are multi-tenant and shared and able to support lots of customers at a lower price point make it easier for companies to get started. We’ll see a lot of competition that will drive the cost down and hopefully make it better for the consumer.

PeC: Please explain cloud computing.

Engates: Cloud computing is the buzzword that describes the way to deliver IT (information technology) infrastructure as a service with a utility pricing model. Merchants can buy computing services and pay for them as they need them. They can buy servers or storage or whatever types of infrastructure services they need for a short period of time. They don’t pay for overhead or services they are not using. So, when demand is high, they pay for more services and when the demand decreases, they pay for less. So, for companies that have a daily spike in the afternoon or sales that taper off in the evening, merchants can buy those computing services by the hour and scale them up and scale them down. I think this is particularly important for ecommerce companies because a lot of them have seasonality in their business. Another emerging area is cloud storage. You can store images and content and data in the cloud for very low cost and serve it directly out of the cloud so that you don’t have to build up that infrastructure.

PeC: How do you think software as a service (SAS) will affect smaller businesses?

Engates: SAS is becoming a bigger and bigger piece of the IT landscape because people in business don’t want to mess with IT. A lot of small companies need full-featured email services and collaboration services but they don’t want to build up the infrastructure to run it themselves. SAS can take care of quite a bit of it today and I would imagine that over time that will even expand. Rackspace hosts a lot of SAS companies, so we see it as a great way to offload some of your IT burden with somebody else.

PeC: Please tell us more about your company, Rackspace.

Engates: Rackspace launched as a startup back in the 1990s and during the 2000s we really grew fast. We’re publicly traded today under the symbol of RAX. We have about 15,000 customers under our traditional hosting umbrella and more than 45,000 servers under management. We host servers in eight data centers around the globe, including two in San Antonio; one in Dallas; one in Herndon, Virginia; a few in London; and a new one in Hong Kong. We have customers in probably over 100 countries, and we have close to 2,500 employees. Rackspace is small enough to really get things done and big enough to have the wherewithal to do them.