RAX's strategy has shifted to "different segments" directly as a result of competition from AWS [0]. Now, AMZN has considerable supplier power over RAX:
"The deal would have been unthinkable just two years ago,
when Rackspace and AWS were fierce rivals. But in early 2014,
Rackspace, facing ever slimmer margins amid a cloud-computing price war,
withdrew from head-to-head competition with Amazon. Since then,
it has focused on offering higher-margin services."
Yes but even prior to this, Rackspace had been a managed cloud provider, meaning they offer services on top of the infrastructure. This is different than AWS.
RAX has its roots in managed cloud, but they moved away from that. They got into IaaS, but have retrenched. Here's RAX's mapping of AWS to RAX P&S for IaaS [0]. That's a lot. RAX has decided to return to its roots (managed cloud) and seek differentiation because it can't compete on IaaS.[1] That'll be tough.
RAX's going private to shift its P&S mix and turn things around.
edit: I'll also point to jsode's great comment above.
Rackspace's IaaS offering was never close to what AWS, Azure or even GCE offer.
It was more similar to DigitalOcean or Vultr, who are not really IaaS but VPS providers. I mean, where are the VPCs? the incredibly redundant load balancing? the VPN gateways, etc?
Disclaimer: It has been 2 years since I evaluated RAX's offerings.
Rackspace offers most of the services Amazon/Google/Microsoft does - but you're right, they did start out as Slicehost which is a Linode competitor (back in what...2009?)
