After years of playing offense in the cloud computing market, Rackspace Hosting finds itself in the uncomfortable position of playing defense, Fool contributor Tim Beyers says in the following video.

Recently, the company introduced what it calls Performance Cloud Servers. The amped-up offering promises an overall 2.6 times boost in overall efficiency for handling large jobs in the cloud, good news when so many larger peers are beefing up their own cloud infrastructures. Microsoft, for example, recently added more support for Hadoop and Big Data analysis in its Azure cloud offering. Amazon.com also recently announced several meaningful improvements to Web Services.

Rackspace's new infrastructure means more options for clients who'd otherwise look to larger competitors. Longer term, Performance Cloud Servers could help the company spin up entirely new services that yield more revenue at a higher margin. Investors should demand nothing less, Tim says.


Now it's your turn to weigh in. Do you like Rackspace's strategy? Would you buy, sell, or hold the stock at current prices? Please watch the video to get Tim's full take, and then leave a comment to let us know what you think.

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The article Rackspace Needs This Strategy to Work originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the  Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Rackspace Hosting at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends Amazon.com and Rackspace Hosting and owns shares of Amazon.com and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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