Rackspace, Microsoft Bid For Their Slices Of The Cloud

Rackspace, a provider of hosted computing services, is taking aim at Amazon.com's Web Services via two acquisitions. The company has picked up Slicehost, a provider of hosted virtual servers, and Jungle Disk, a provider of online storage--for a combined $11.5 million--to gain a bigger presence in the emerging cloud computing market. Meanwhile, Microsoft, which has lagged behind Amazon and others in cloud computing offerings, is expected to push its cloud agenda ahead this week by providing details on the Live Mesh synchronization and developer platform, a utility computing platform that Microsoft CEO Steve Ballmer has referred to as "Windows Cloud," and online storage.

Rackspace manages more than 40,000 dedicated servers for businesses in its data centers using a traditional hosting model, making it one of the largest independent providers. It sees Slicehost as paving its way into the new area of cloud computing, currently dominated by Amazon Web Services, in which customers rent processing capacity through the use of virtualized servers, scaling up or down based on need. Slicehost now hosts 15,000 virtual servers, or "slices."

Customers buy slices of computing power, memory, storage, and bandwidth based on a monthly fee. For example, Slicehost offers an 8-GB slice with 2,000 GB of bandwidth for $450 a month. Rackspace plans to expand the business globally through its data centers in Hong Kong and London. For applications that need high performance and security, Rackspace thinks customers may stick with its conventional hosting model.

Rackspace has had a small presence in cloud computing with a division called Mosso. The division will be renamed Cloud Sites and will provide a hosted server platform for Web businesses that pay based on traffic spikes. Rackspace also renamed its CloudFS online storage service Cloud Files, with replicated storage starting at 15 cents per gigabyte. Jungle Disk, which provides consumers and businesses with online storage, will fall within this division.

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Meanwhile, Microsoft seems very likely to announce a utility computing platform at least somewhat akin to Amazon's EC2 during its Professional Developers Conference this week, where the company will provide more details about how developers can take advantage of upcoming cloud offerings--and Redmond's recent data center investments.

Microsoft will show off scenarios for its cloud computing services, like publishing and conferencing services, and talk about how companies and individuals can build apps that include both on-premises and cloud-based components. "The idea of a distributed operating system is something that has merit," says Zane Adam, Microsoft's senior director of virtualization strategy. Look for Microsoft to argue that it's well-suited to bring businesses and developers the scale, expertise, and breadth of choice they need when deciding how to embrace elements of cloud computing.

But Amazon's driving its cloud effort forward, too. Last week, it started offering service-level agreements; introduced beta services running SQL Server and Windows, including remote desktop access; and added management and monitoring capabilities