Rackspace Wants To Take On Amazon's Cloud Computing Efforts

from the interesting-battles dept

Over the past couple of years, Amazon has successfully built up quite a business in commoditizing and renting out its server and process power through its Amazon Web Services efforts, such as S3 and EC2. These days, a lot of startups don't even bother getting servers in a hosting facility, knowing they can just scale up on Amazon's machines. That, of course, could represent a threat to the big hosting facilities, such as Rackspace. And while many thought the eventual competitors against Amazon in this space would come from the likes of Google or Microsoft, it looks like Rackspace is trying to be a bit proactive here. It just bought two companies and announced a competing web services platform. The two companies are Slicehost, which does virtualization, and JungleDisk, an online backup service that is built on Amazon's S3 storage system.

The JungleDisk deal is particularly interesting, as Rackspace knows that JungleDisk users (myself included) are effectively all Amazon S3 customers. If it can offer an easy and convenient way to switch over, then it can take a bunch of customers away from Amazon and move them right over to its own platform. If you're unfamiliar with JungleDisk, it creates a virtual mounted drive on your computer that connects to Amazon's S3 platform. So, as long as you have internet access, you have an unlimited size hard drive that you can reach, where you pay based only on what you use. On top of that, it includes backup software (or you can use other backup software) so that you can regularly back up anything on your computer onto this network drive regularly. JungleDisk customers pay for the software, but the ongoing costs are all paid to Amazon. It's actually quite useful (and crazy cheap compared to some other backup services). It would be interesting to see if Rackspace also allows a service to let you back up to both Rackspace and Amazon, so if one goes down, you still have access to the other. Either way, it looks like the competition in the so-called "cloud computing" space is about to heat up.

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Don't Underestimate Google's Ability To Shake Up Established Markets

from the complementary-goods dept

The generally-reliable Wall Street Journal is reporting that Google is planning to introduce a free network storage product. In response, over at ZDNet, Larry Dignan suggests that Google is late to the party and worries that they'll turn customers off with annoying ads cluttering up their desktop. This gives Google too little credit. In the first place, virtually every successful product Google has launched has entered an already crowded market. Most obviously, there were already plenty of search engines when Google was founded. More recently, GMail and Google Maps were both launched in what were thought to be relatively mature markets, but Google nevertheless found ways to shake up those markets by producing extremely polished offerings that had features missing from existing products. It may very well do the same thing in the storage market. By the same token, it would be shocking if Google tried to shove intrusive desktop ads down users' throats. Google has always been careful not to let its efforts to generate revenue interfere with the usefulness of its products. For example, it offers POP and IMAP features for GMail, despite the fact that it doesn't have any way to directly monetize users who check their mail that way. Google does that because it knows that almost every POP or IMAP user will check their mail on the web some of the time, and it will get the chance to display ads to users at that point. By the same token, I expect that Google will find non-intrusive ways to present ads in some parts of the GDrive product, while offering other parts of the product ad-free. The most obvious way to do this is to follow the GMail model: ad-free access from the desktop alongside an ad-supported web-based interface. As Mike pointed out earlier today, one of the secrets to Google's success is to recognize the power of complementary goods. Google understands that if it can get a lot of users using its products, it will eventually find a way to monetize those eyeballs. And more importantly, it understands that it's short-sighted to generate revenue in a way that alienates customers and thereby reduces long-term traffic growth.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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