I wonder if anyone in their exec team ever brought up the fact that they got their ass kicked by DigitalOcean, and similar platforms when it comes to affordable and simple hosting.
The biggest factor was the shift in corporate mindset from “we need to operate our own servers” to “we need to orchestrate services running on someone else’s servers.” Probably AWS is most to blame for that.
Rackspace tried to make the jump across that chasm several times but they were trapped on the wrong side of the Innovators Dilemma. All their existing customers expected (expensive) full phone support. And new customers who wanted automated cloud systems with minimal support did not look to Rackspace for that.
Eventually they leaned entirely toward service and started reselling and supporting all the major cloud platforms. I would bet that is the majority of their revenue today. Any hosting they do should be considered a legacy business.
From my personal experience, Digital Ocean did pull away a lot of indie devs and small businesses away from Rackspace. Those folks did not need most of the features of AWS. They just needed simple cloud servers and maybe some load balancers.
My own small business used Rackspace in 2010 to 2013 ($5k per month op cost). When DO came to our radar, it was dead simple to switch to and cut the cost almost by half.
Another thing I remember about DO was their abundance of community articles (HowTo's and server setup tips, etc...) that were well-maintained and always kept up-to-date with latest linux distros.
Play around with various hosting company names in Google Trends if you want to see how interest changed over time.
I’m not saying DO is bad, far from it. But it’s more accurate to say that they benefited from trends that were well underway before they had significant market presence.
Rackspace were never part of the affordable hosting segment.
I think DigitalOcean ate the shared PHP hosters' lunch.