Rackspace Plans Major Cloud Expansion in UK

Rackspace Hosting plans a major expansion of its cloud computing infrastructure in the United Kingdom, and has hired Digital Realty Trust to build a new data center.

Rackspace has been experiencing strong growth in its cloud business, as its total server count has grown by more than 10,000 over the past year while revenue has improved 27 percent. In recent years the San Antonio company has expanded the horizons for its cloud computing service, adding infrastructure in Europe and Asia as well as the U.S.

Rackspace (RAX) has operated data centers in the UK for years to support its managed hosting business. In 2009 the company opened a new energy-efficient facility in the London suburb of Slough where it was consolidating servers from older facilities. In 2011 the company introduced its cloud offerings for UK customers include Rackspace Cloud Files and Cloud Servers.

On Jan. 11 Rackspace signed an agreement with a subsidiary of Digital Realty for a 10 megawatt data center in the UK, with the exact location yet to be determined, according to an SEC filing. Under the terms of the agreement, Digital and Rackspace must agree on a site within the next year, and then determine a data center design. The agreement suggests a new data center build, but appears to allow for development

The data center will feature five data halls, which will be built in two phases: a first stage of three data halls of approximately 2 megawatts apiece, and a second stage of two more data halls. The initial schedule calls for one new data hall every 12 months, but Rackspace has the right to adjust that schedule as demand dictates.

With the UK deal, Rackspace has continued its practice of leasing “wholesale” data center space to expand its footprint, rather than building its own facilities. In the wholesale data center model, a tenant leases a dedicated, fully-built data center space. This approach is quicker and cheaper than building an entire data center facility. The tenant pays a significant premium over typical leases for office space, but is spared the capital investment to construct the data center.

Rackspace has leased significant amounts of wholesale space from DuPont Fabros Technology (DFT) in both Virginia and Chicago, and from Digital Realty in Dallas and in Sydney, Australia. Rackspace has also bought land in Oregon for possible expansion of its data center footprint, but say it has not finalized build-out plans.