Rackspace Survey Reveals that Small Businesses are Missing Out on Cloud Hosting Benefits

SAN ANTONIO – Jan. 26, 2008 – While small businesses lack awareness of cloud hosting, mediumsized businesses appear prepared to reap the benefits of cloud hosting, as revealed in a recent survey conducted by Vanson Bourne for Rackspace® Hosting, (NYSE: RAX), a leader and specialist in hosting. More than half of the mid-sized businesses surveyed are aware of cloud hosting with 57 percent of medium businesses in the US and 53 percent of medium businesses in the UK responding as such.

However, as compared to their medium-sized counterparts, the survey indicates that small businesses may be more confused about current cloud hosting technology and services, and less certain of how to utilize the cloud in the future. With over two-thirds of small businesses in the US and UK unaware of cloud hosting, this business segment appears poised to miss out on a revolutionary opportunity, that can be of great benefit, especially during this tough economic climate. “The cloud can be a profitable technology for businesses of all sizes and the stats show us small businesses are not yet taking full advantage of the cloud services that are currently available,” said Lew Moorman, chief strategy officer, Rackspace Hosting. “Cloud is a proven technology which is unique in that it is not a one-size-fits all technology. There are different flavors of cloud hosting offerings which allow businesses to take advantage of the benefits of hosting in very price competitive and flexible format which is an ideal mix for all IT departments, no matter their size.” The survey also shed light on the potential future adoption of cloud hosting. Although only 14 percent of medium businesses in the US and 11 percent in the UK are already utilizing cloud hosting, 55 percent of medium businesses in the US and 42 percent in the UK have plans to use cloud hosting in the future. These respondents identified data storage and back up, replacing centralized computing and boosting server availability as some areas where they would leverage cloud hosting within their IT departments.

Within the US and UK small business markets, nearly 60 percent of the survey respondents have no plans to adopt cloud technology. It appears from these results that small businesses may be shying away from Cloud Hosting because they do not fully understand the added benefits over their existing hosting solution and, even more surprising; they may view the cloud as being cost prohibitive. This could be a detrimental mix up for small businesses in that they could benefit from the cloud’s scalability and cost efficiency, especially when coupled with their current traditional hosting configuration. A hybrid hosting solution can make for a truly powerful option. “We initially began working with Rackspace Hosting because of their reliability and commitment to service,” said Mike McDerment, CEO of FreshBooks.com. “And since adding cloud hosting to our managed hosting configuration, we now have a solution in place that is tailored to our specific needs. Being able to match a need directly to a technology with Rackspace’s hybrid hosting offering allows us to reap the benefits that count, whether its redundancy, scalability or cost savings.”

Mosso, The Rackspace Cloud

Rackspace’s cloud hosting portfolio is supported by three core offerings, all part of The Rackspace Cloud:

• Cloud Sites™ -- Rackspace’s flagship cloud offering, developed by Mosso, a division of Rackspace, offers a scalable platform for handling huge traffic spikes and a pay-as-you-grow pricing model. Cloud Sites is a heterogeneous environment, supporting both Windows and Linux.

• Cloud Files™ -- Rackspace’s internet-based storage service gives developers instant access to an enterprise-grade storage infrastructure and reduces overall investment and IT costs while providing infinite scalability. Through a partnership with Limelight Networks, Rackspace allows developers to easily distribute content to millions of end users around the world and bring scalable content delivery and application acceleration services to the masses. Cloud Files offers an industry leading SLA and a highly competitive pricing model with replicated storage starting at $0.15/GB and CDN bandwidth starting at $0.22/GB.

• Cloud Servers™ -- This new hosting solution, which will deliver on-demand server capacity to businesses of all sizes, will leverage key technology developed by the company Rackspace recently acquired, Slicehost, which uses Xen virtualization software. Slicehost will remain as the company’s developer brand, creating innovative new features driven through shared intellectual property in conjunction with development initiatives from Rackspace.

For more information on cloud hosting and its benefits, visit:
http://www.rackspace.com/information/hosting101/cloud_clinic/index.php

The methodology for Rackspace’s survey research which was conducted between mid-October and mid-November of 2008 and involved 1,500 US and UK-based small and midsized companies. Approximately 36 percent of survey recipients responded to the questions. Detailed information and the full survey report can be found at:

http://www.rackspace.com/downloads/surveys/CloudAwarenessSurvey.pdf

About Rackspace Hosting
As a global leader and specialist in hosting, Rackspace® Hosting is changing the way businesses worldwide buy IT. Rackspace delivers computing-as-a-service, integrating the industry’s best technologies into a flexible service offering, making computing more reliable and affordable. A trusted partner to companies of all sizes, Rackspace enables IT departments to be more effective. Rackspace is distinguished by its award-winning Fanatical Support®, furthering the company’s mission to be one of the world’s greatest service companies. Rackspace is recognized as one of FORTUNE Magazine’s 100 Best companies to work for in the US, ranking number 32 on the 2008 list. Rackspace's portfolio of hosted IT services includes managed hosting (www.rackspace.com), email hosting (www.mailtrust.com) and cloud hosting (www.mosso.com). For more information on Rackspace Hosting please visit: www.rackspace.com.

Forward-Looking Statements
This Press Release contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of Rackspace Hosting could differ materially from those expressed or implied by such forwardlooking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements relating to expected trends of business relating to IT services; any statements of expectation or belief directly relating to Rackspace business derived from the survey results; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include a substantial margin of error in the customer survey results, inconsistencies in respondent's understanding and Rackspace Hosting's analysis of survey questions and results, the possibility that expected benefits from any future IT services offered may not materialize as expected; the achievement of expected operational results from any IT services offered may not be attained; and other risks that are described in Rackspace Hosting's quarterly report for the third quarter of 2008 on Form 10-Q filed with the Securities and Exchange Commission on November 11, 2008. Except as required by law, Rackspace assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.