Presented by:

Andy Schroepfer

VP Strategy, Rackspace Hosting

Date: November 2009

CLOUD 2.0:HUG YOUR SERVERS

…GOODBYE!

Forward-Looking Statements / Safe Harbor Statement

This presentation 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 forward-looking statements and assumptions.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements concerning expected data center operations at the new facility, operational and financial results, long term investment strategies, growth plans including international expansion plans, expected results from the integration of technologies, the performance or market share relating to products and services; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include infrastructure failures, including failures at the new data center, the continuation of the current difficult economic conditions or further negative fluctuations, the effectiveness of managing company growth, technological and competitive factors, regulatory factors, and other risks that are described in Rackspace Hosting's Form 10-Q for the quarter ended March 31, 2009, filed with the SEC on May 12, 2009.

Except as required by law, Rackspace Hosting 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.

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Cloud Computing is like High School“Relations!”

Everyone talks about it

Few are actually doing it

Those doing it, aren‟t good at it

Most keep trying to get good at it

In time, everyone finds that with the

right partner, they get it right!

4

Dedicated & Private Cloud

Infrastructure as a Service

Platformas a Service

Software as a Service

$600+ mm revenue

25,000+"slices"

130,000+apps

1.5 mm paid businessusers

1# 2# 1# 1#Business Email

Platform

Cloud

Source: Tier1Research, 2008 and company estimates of publicly available data of leading cloud hosting and fee business email providers

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"The bulk of business

computing will shift out

of private data centers

to the „cloud‟."

– Nicholas Carr

Everyone Has IT

Your IT

Your Business

IT Differs Greatly By Employee Size

Collectively, there is a lot of IT

EmployeeSize

# of Firms Size of Each IT

Total IT SizeBy Category

1-99 7,000,000 X 7,000,000 X

100-499 85,000 5X 500,000 X

500-4,999 16,000 50X 800,000 X

5,000+ 2,000 500X 1,000,000 X

All Firms 7,100,000 9,300,000 X

What % is hosted with a third-party?

~5%This means 95% of IT Can Still Be Hosted

(Colo, Managed, Cloud, SaaS)

The Big But(ts)

SaaS adoption is high and

has a fractional IT footprint

versus on-premise system (grows numerator; shrinks denominator)

Many new apps being

adopted never existed (grows numerator & denominator)

Cloud I-a-a-S offerings

enable higher utilization (shrinks denominator)

Without Sunk Costs … IT is “free” to be replaced In

frastr

uctu

re Investm

ent

Time

Cum

ula

tive I

nvestm

ent

Time

CLOUD

On-Premise

Pooling Lowers Costs

Fixed costs vs. renting sliver of fixed costs

Outsourcing has inventory of “compute” and “expertise”

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13

Peak Server & Network

Infrastructure

Security Experts

Network Experts

OS Experts

Management Software

HR Benefits

Savings of 60% at slow times

Base Infrastructure

Managed Services

On-Demand Infrastructure

Savings of 30% at peak times

Focus Where It Really Matters

of IT organizations’ time is spent on

updates, patching, and maintenanceover

70%

Maximize IT resources to do “more with less”

Reduce “server stress”

Make IT an enabler, not an obstacle

Be equally prepared for failure as success

We can agree on the goal, but there are

different ways to get there

Truly a New Era of Computing

Centralization and scale drive “better, faster, cheaper”

The old models aren‟t gone, just less relevant

Cloud Computing is about pooling

70’s – 80’sMainframe Era

90’s – 2000’sClient Server Era

2010 – beyondCloud Era

The Cloud is … For Everyone, Not Everything

Cloud is a New Tool, Not a Panacea

Business Should Ask “What & Where,” not “Yes or No”

Cloud Benefit‟s Spark and Empower Innovation

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ERPOSS

WorkflowWebsite

BlogsWikis

SubversionTest/Dev

Department sites

EmailWorkspaces

ChatIM

Managed Hosting

STANDARD APPS UBIQUITOUS APPSCUSTOM APPS

Cloud Hosting SaaS

STOP & THINK!

A Computing Strategy is Key

Security Is A Red Herring

Security concerns are not unique to Cloud

Should always be a priority, regardless of solution

Key Drivers of Comfort

Time = Proof

Compliance evolution

Hybrid Models

Trusted Relationship

What the heck is Cloud 2.0?

The period of time

after Cloud 1.0 &

before Cloud 3.0

Change Is In The Air For The IT Department

IT should embrace rather than fear the cloud

Development critical to IT of the future

NO MORESERVERS

WORKLOADSTRATEGIES

SOFTWAREDEVELOPMENT

YOUR LOGO HERE

NO MORESERVERS

andy.schroepfer@rackspace.com

Twitter: @shrepfur