| By Maureen O'Gara |
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| February 28, 2013 06:00 AM EST |
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Rackspace has slashed the price of its cloud bandwidth and content delivery network (CDN) services by 33%. It's also implementing tiered pricing for its OpenStack products, starting with Cloud Files, its object storage service.
Most of the new pricing will kick in over the next few weeks.
The bulk of Rackspace's revenues still come from hosting. In its last quarter its cloud sales, which compete with Amazon's, were up 49% year-over-year to $87.3 million. As good as that might sound for the last five quarters its cloud sales have been on a downward trajectory. For instance, year-over-year cloud revenue rose 69% in Q2 but only 57% in Q3.
The Wall Street Journal concluded that the company isn't delivering on its high valuation. Its growth depends on how quickly its OpenStack Infrastructure-as-a-Service is adopted.
Anyway, customers deploying bandwidth-intensive workloads serving large amounts of content like video streaming, mobile and applications requiring fast content delivery will pay 12 cents a gigabyte instead of 18 cents a gigabyte.
The tiered pricing for Cloud Files is already gone into force. Cloud Files storage will run 10 cents a gigabyte a month for the first terabyte, dropping to seven-and-a-half cents a gigabyte a month or lower for storage amounts of over a petabyte.
CTO John Engates said, "The Rackspace Open Cloud is built upon a simple pricing model with no hidden costs or extra charges. This simple and straightforward pricing approach is a key part of how we help customers take advantage of the real value of the Rackspace Open Cloud, particularly for the next generation of bandwidth and content-centric web applications, which must deliver quality user experiences on a mobile and global basis."
The company said it aims to make budgeting easier for mid-market and enterprise customers through simple pricing, avoiding charging customers for "extras" that are difficult to predict or estimate.
For instance, it doesn't charge for I/O requests on its Cloud Block Storage or for API requests on its Cloud Files product.
