Cutting through some of the fog surrounding cloud

The global cloud computing industry grew to an estimated $40 billion in 2011 and doesn’t show any signs of slowing.

More companies are throwing their hats into the ring and competition is getting fierce in an industry that is expected to grow to about $241 billion by 2020, according to Forrester Research.

San Antonio-based Rackspace Hosting Inc. is a company that has jumped on board the cloud bandwagon, seeing its cloud revenues hit $50.6 million during the third quarter of 2011…


As the year comes to a close, John Engates, chief technology officer at Rackspace, offered some insight into how Rackspace’s cloud business and the overall cloud industry will mature in 2012.

Q: How will the industry fare as competition heats up?

A: We’re going to see more startups or small cloud software companies get acquired by the more traditional, incumbent software companies. We’ll see more new entrants come into the market because there’s a lot of opportunity that’s sort of left untapped. So, there’s plenty of room over the next two or three years for more development of cloud without people going head-to-head and stepping on each other’s toes. But after those two or three years, we’ll start to see more of a consolidation.

What we’re in right now is an era where we’re trying to do the land grab. We’re still early on in the adoption of cloud computing.

Q: Any chance Rackspace could be one of the companies that could be acquired?

A: I hope not. It’s been very well communicated by our CEO and others that we don’t have any intention to be acquired. We don’t want to be acquired. But obviously we’re a public company, we can’t absolutely 100 percent say it would never happen. But it’s not our goal, and we’re not advertising ourselves for sale. 

Q: Which sectors will start adopting more cloud services?

A: You’re starting to see innovation because of the cloud in various areas: medical, pharmaceutical, science, research. Even in the media and entertainment business, we see people using cloud as a way to compete with the big guys. It helps level the playing field between the guys that have and the guys that have not.

Q: How will increased use of mobile devices affect cloud business?

A: Mobile is driving the demand for infrastructure to power all these new mobile applications, games and devices. All these mobile devices need to communicate with something. They’re almost useless without the Internet or the cloud. And that just means there’s going to be a lot more demand for cloud services. We’re seeing interest from companies all over the world to run mobile applications at Rackspace. It’s something we already do and something that we’ll continue to grow.

Q: There is some skepticism surrounding information security in the cloud. Will that eventually fade or worsen?

A: Half of this issue is people’s fear, uncertainty and doubt about things and the other half are legitimate security concerns. It’s going in the direction of doing away with those legitimate concerns. If cloud security is still a sticking point in 2012 and 2013, then those concerns are mostly in your head. It’s a lot like when we first started doing e-commerce. There were a lot of skeptics who said they’d never put their credit card numbers online. Ten years later, the big shopping days are all about e-commerce. It takes time for some of these things to sink in.

Q: As more companies look to adopt cloud services, do you expect to see more growth in public or private clouds?

A: Public cloud has a big head start. … Private cloud is one of those things that’s just now maturing and emerging as an option for companies. Companies haven’t had too many options and now there are a handful of options to build a private cloud. That will lead companies to look at private cloud, not on its own but in conjunction with public cloud.”

Q: What role will OpenStack play for Rackspace and the overall cloud industry?

A: For Rackspace, it means we can go faster, we can get more done, deploy more services and tap into a larger talent pool than we have on our own. For the industry, we’re building an ecosystem. No developer is going to want to develop for the losing ecosystem. They’ll want to develop for the winning ecosystem. And that’s what OpenStack promises to be is a winning cloud ecosystem.

Q: Will Rackspace’s business shift more from traditional hosting to the cloud?

A: The cloud is the fastest-growing part of the business. But we believe that a hybrid approach is the right approach. It’s not an either or; it’s both.

Q: How will Rackspace expand its cloud offerings?

A: We’ll be investing in the cloud that we have. We have some new services that will come onboard to complement what we have. A couple of things have already launched in beta, like our database cloud. We’ve got some new capabilities that will certainly be on the roadmap. A lot of them will be enhancing the abilities of the cloud to take on more different types of applications, more variety.

Q: How will the economy affect the adoption of cloud?

A: If the economy comes back in a big way, it just means companies will buy more cloud faster.