The Rackspace outage continues with no immediate plans to restore service

Rackspace Technology Inc. Customers had questions as the outage of email services provided by by extended into a fourth day Monday, but the San Antonio company didn’t offer many answers.

This has forced some to fend for themselves as they seek alternative ways of communicating with customers and doing business. Others complained of spending hours on hold for customer service and the difficulty of migrating accounts to alternative platforms without support.

Bandera business owner Stephanie Atkinson did just that Friday after she and her husband realized their email systems weren’t working. He spent the weekend migrating his business accounts to GoDaddy.

“On Monday, I work, but I thank myself, not Rackspace,” said Atkinson, who runs a technology market research firm. Her husband is in the helicopter business.

Rackspace said Friday it was experiencing problems with its Microsoft Exchange platform, which provides email services to customers. On Friday night, he blamed what he called a “significant failure” on an unknown security incident. On Sunday, he said there were no immediate plans to restore service.

Previous story: Rackspace blames “security incident” for outage of email services for customers

Instead, the company advises customers to switch to its competitor’s cloud-based Microsoft 365 for email services, which it offers for free. On Sunday, it said at least 1,000 employees were working to resolve customer queries and take support calls on transfer accounts.

Rackspace did not respond to questions Monday about the nature of the security incident, the number of customers affected or when service might be restored. The company also declined to make an executive available for an interview about the situation, instead directing a reporter to its website, where it posted updates.

“We have successfully restored email service to thousands of customers on Microsoft 365 and continue to make progress in restoring email service to every affected customer,” the company said Monday morning. “Moving to Microsoft 365 is the best solution right now.”

Rackspace shares fell more than 15 percent on Monday to close at $4.10 per share.

Angry customers

Angry customers continued to blast the company on social media. Some complained about hours spent waiting with customer service and difficulty switching to Microsoft 365 without support.

Atkinson, a Bandera businesswoman, said she and her husband have been longtime customers of Rackspace and haven’t had problems before. On Monday, he said he did not cancel service because he hopes to access his old emails when service is restored. If they can’t be recovered, he said, he’s “done with Rackspace.”

“It’s a terrible thing,” Atkinson said. “They serve a lot of small businesses around the world, and not everyone is as tech-savvy as I am.”

Glen Phillips of California, who manages music artists, said he also spent hours trying to figure out how to access his emails this weekend.

“This is all just ridiculous,” he said.

At one point, after four hours on hold for customer service, Phillips said her call simply hung up.

“It’s the unknown factor,” he said of concerns about his business. “It’s the fact that people try to catch me and they can’t, then you have to warn them that it’s broken.”

Phillips finally made progress and spoke with a Rackspace representative Monday morning, assuring him that his emails would not be lost.

“I just want these emails back,” he said.

It’s not unusual

Bryan Hornung, CEO of Marlton, New Jersey-based Xact IT Solutions, said some small and medium-sized business owners struggle because they don’t have IT staff and don’t understand how to migrate their accounts to Microsoft 365.

More about Rackspace: ‘We are confident in our strategy’: Rackspace CEO is optimistic about the success of the company’s reorganization

“The frustration is very high,” he said in a LinkedIn video.

Hornung said that such security incidents are not unusual.

“We see these third-party cloud providers being attacked all the time,” he said.

In a Medium blog post, security researcher Kevin Beaumont said the problems could be caused by a threat actor exploiting vulnerabilities known as ProxyNotShell at Microsoft.

“I expect attacks on organizations through Microsoft Exchange to continue through 2023,” he said.

Rackspace said Sunday that it was working both internally and with “external experts to determine the full scope and impact of the issue.” He also said he expected the recovery “could take several days.”

The Rackspace Struggle

Rackspace has a long history in the San Antonio area, where it remains the largest technology company.

It was founded in 1998 by Trinity University students and originally hosted websites for clients. Rackspace Hosting Inc. known as, first went public in 2008, when it made the former Windsor Park Mall its headquarters.

Rackspace then changed its business model amid competition from deep-pocketed companies such as Amazon, Microsoft and Google, which caused its market value to decline. It has begun to increase its focus on providing cloud-based services, including through partnerships with competitors.

In 2016, New York-based Apollo Global Management took the company private in a $4.3 billion deal. It has since acquired several businesses, including Onica, a cloud services and management company, and Datapipe, a provider of managed services for public and private cloud customers.

Apollo took the company public again in 2020, but underperformed. Its last profitable quarter was in early 2019, although revenue has been growing.

In recent years, Rackspace has cut hundreds of jobs, including about 700 jobs in 2021, or 10 percent of its global workforce. The company said most of the jobs being cut will be filled in offshore customer service centers.

Earlier this year, Rackspace said it planned a reorganization aimed at boosting profitability by splitting the company into separate business units that provide public and private clouds.

In late September, the company appointed a new CEO to oversee the reorganization. President and Chief Financial Officer Amar Maletira replaced Kevin Jones as CEO, while Jones moved to a position with Apollo, Rackspace’s largest shareholder.

The company also announced it was leaving its longtime headquarters and downsizing office space.

The company will move next year to 75,000 to 90,000 square feet in an office building just north of Loop 1604 along US 281 near Stone Oak. Its current headquarters covers approximately 1.2 million square feet.

Last month, Maletira said Rackspace was making “good progress” on a reorganization to be unveiled in January.

Source link