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The Top Three Cloud Stocks from Gartner’s Magic Quadrant: Amazon.com, Inc. (AMZN), VMware, Inc. (VMW)

2. Rackspace Hosting, Inc. (NYSE:RAX)

Rackspace’s OpenStack involvement allows it to compete at the scale and capacity of Amazon. Rackspace is attempting to build a cloud that can scale to just about anyone’s needs, says financial analyst Pat Walravens, and he believes with the OpenStack backing the size of deals that Rackspace is able to land will only continue to increase.

“If Amazon is going for scale, cost and breadth of services, Rackspace is going for its services, including what it calls its fanatical support for customers,” says Forrester analyst Dave Bartoletti. “They’re really trying to make the play that they’re the safer enterprise choice and with OpenStack, they want to be known as the non-Amazon.”

Rackspace announced in February that it has entered into a definitive agreement to acquire ObjectRocket, a MongoDB database as a service (DBaaS) provider. With ObjectRocket’s open source-based MongoDB solution, Rackspace will broaden its OpenStack-based open cloud platform to offer customers a NoSQL DBaaS.
NoSQL software revenue is expected to grow at a CAGR of 82% to reach $215 million by 2015. While the acquisition will undoubtedly be EPS accretive for Rackspace, it will also help the company establish a strong presence within the high growth NoSQL database market.

Rackspace has been betting big on OpenStack, which Gartner says is the strength for the company. Rackspace has the second-largest market share in the cloud, provides excellent customer support and offers low-cost entry points into the cloud, making it ideal for experimentations. Rackspace’s OpenStack involvement allows it to compete at the scale and capacity of Amazon. Rackspace is attempting to build a cloud that can scale to just about anyone’s needs.

It uses Xen to virtualize its cloud, and has object storage, CDN and platform as a service (PaaS) offerings. Its goal is to provide hybrid cloud connectivity with customers who use OpenStack in their on-site private clouds. Its traditional strength in the managed hosting space gives it a strong customer base to sell its cloud products into, Gartner says.

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