Rackspace is making quite a name for itself in the IT world.  According to the Seeking Alpha article “Rackspace:  The Best Business Model in the World” they definitely deserve to be recognized for their hosting and Cloud computing services.

Rackspace will take market share due to superior customer service and adopting OpenStack, an open source framework for delivering Cloud computing technology.

This article also raises an important point.  One of the most important and often overlooked parts of any company is customer service.  Companies that understand the importance of customer service have more opportunities to excel.  Rackspace not only delivers a premium product but they also understand the importance and power of customer service.  They have a distinctive competitive advantage due to their customer support.  The article provides a chart that highlights how the majority of Rackspace customers are happy with their services so they are not interested in other competitors.  Due to the fact that they are able to maintain a stable client base they experience above-average revenue growth.

Some argue that Rackspace will undergo margin compression and that with so many other competitors in the market will not be able to maintain their profit margin.  However, Rackspace has improved their net margin as well as their annual revenue growth over the last 9 quarters.  The author believes that even with the pressure of big businesses such as Amazon and Google, Rackspace will not only survive, but also continue to flourish.

Rackspace will take market share due to superior customer service and adopting OpenStack, an open source framework for delivering Cloud computing technology.

Rackspace is definitely doing big things but with other notable contenders such as LucidWorks adding to the mix, Rackspace isn’t the only “go-getter” in the game.

April Holmes, October 16,  2012

Sponsored by ArnoldIT.com, developer of Augmentext.