Microsoft and Rackspace Form Cloud Alliance

By Shira Ovide 

Microsoft Corp. and data center services company Rackspace Hosting Inc. are teaming up to ease customers over barriers to using Azure, Microsoft's cloud computing service.

Under an alliance set to be announced Monday, Rackspace will help companies start using Azure and guide them on how to squeeze the most for their money from Azure's processing, data storage, databases and other services. Rackspace will help solve service or security problems and help companies combine Azure with their own computing facilities.

The pact is aimed, in part, at addressing the tangle of technology headaches many businesses encounter as they shift from on-premises computing to cloud services. Analysts say such issues are among the biggest barriers holding back companies from using shared processing and storage over the Internet.

Rackspace is known for top-tier technology support and customer service. Its reputation could give Microsoft a leg up as the software giant tries to catch up to market leader Amazon.com Inc.'s Amazon Web Services.

"This is a way for them to enlarge the market for Azure customers," said Rackspace CEO Taylor Rhodes.

The deal adds to a list of strategic alliances forged by Microsoft CEO Satya Nadella that make it easier for companies to use Microsoft services, even alongside those of competitors. In the 17 months since Mr. Nadella took the top job, he also has struck deals with file-sharing startup Box Inc. and rolled out version of Office software bundle for Apple Inc.'s iPad to make Microsoft products work together with other popular business tools.

The alliance also is a big step for Rackspace, which has been forced to revamp its business strategy to avoid competing directly with cloud services offered by deep-pocketed tech giants such as Microsoft and Amazon.

Mr. Rhodes said the partnership with Microsoft is the first between his company and a major "public" cloud provider, referring to companies like Amazon, Google and Microsoft that offer access to shared computing facilities rather than operating private facilities on their customers' behalf. Mr. Rhodes said Rackspace is open to striking similar arrangements with other public-cloud firms.

Customers that use the Rackspace-Azure service can pay for Azure computing plus Rackspace support in a single bill from Rackspace, or they can opt to pay separately for Azure and Rackspace services.

The companies plan to announce their new alliance on Monday at a conference for Microsoft and its partners.

Write to Shira Ovide at [e-mail]

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