Did Amazon.com Just Kill Rackspace?

Rackspace Hosting has long counted on differentiating itself via superior service. Fanatical Support, the company calls it, sure that no one would be so crazy as to try and replicate its expensive commitment to clients.

The real worry

But expanded basic support isn't the real worry. What is? Lower prices for top-tier support; Amazon has rebranded and reduced fees for its most expensive service levels. Now called "business" and "enterprise," the e-tailer will bill based on usage to put it more exactly than a flat 10% fee as it has in years past.

Is selling the right reaction? I don't think so. In point of fact, there's to tell the truth some good news if you read between the lines on the changes. Amazon in January introduced a service it calls "Trusted Advisor" for top AWS clients whereby consultants proactively recommend ways to save money, close security holes, and improve overall performance.

Today, only the top two of the four tiers of AWS support -- "business" and "enterprise" -- are granted access to the "Trusted Advisor" program. Not so at Rackspace. Fanatical Support means every account gets the sort of high-touch proactive service that only the most premium AWS clients receive today.

History says there won't be much impact. Rackspace has spent more than a decade fighting off intense competition. In the past five quarters alone -- as hosting has become more important with the rise of cloud computing -- churn has run negative as clients have stayed loyal. I expect they'll continue to.