Industry observers have been wondering about the impact of cloud computing on the traditional datacenter providers. There is always the question lingering about the hit datacenter providers will take as they move from the traditional managed hosting world to cloud based world. Conventional Wisdom tells us that premium enterprise hosting is always a safer bet for datacenter providers than cloud based services which are mainly attractive to SMB segment. However, Rackspace has proved that it is not the case.
Rich Miller of Datacenterknowledge.com offers some insight on this using the financial metrics data from Rackspace. From his post,
- Growing cloud computing operation at Rackspace hosting is delivering more revenues from their datacenters
- In 2009, as Rackspace added most of their 38,000 new customers to their cloud division, the average revenue for each square foot of finished data center space increase from $3,764 to $4,602 – an improvement of 22 percent
- This increased efficiency is the reason why Rackspace increased their quarterly revenue by 23% without expanding their datacenters in a big way
How did they increase the utilization?
- They could pack more servers per rack: For eg: in the one year period ending in Sept. 30th, they increased their finished datacenter space by 5.5 percent and the amount of floor space taken by server racks jumped by 6.6 percent. However, their server count jumped by 17%
- More Customers Per Server: During the same period, their customer base grew by 46%. The fact that most of these customers are into their cloud services allowed them to allocate the resources for this increased customer base without increasing the servers much. Multi-tenancy, for the win
- Extend Lifespan of Retired Servers: They could extend the lifespan of retired servers from their premium hosting operations because the fault tolerance offered by these clusters in the cloud lets them to use the servers till they actually fail
Clearly, the financial metrics from Rackspace and other data center providers shows that moving to cloud marketplace is financially better for datacenter providers. If you are interested in learning more, read Rich Miller’s post or follow his blog.
