Rackspace Surpasses Two Million Paid Business Email Users

SAN ANTONIO – October 18, 2010 – Rackspace® Hosting (NYSE: RAX), the world’s leading specialist in the hosting and cloud computing industry, today announced the company has more than two million paid users of its hosted email offerings, including its proprietary Rackspace® Email, hosted Microsoft® Exchange and a hybrid offering of the two services. Rackspace attributes this growth to its reputation for helping businesses take advantage of a full portfolio of cloud offerings, its award winning Fanatical Support®, the cost savings that can be realized through its unique Hybrid offering, and the preference to use robust and familiar features like Microsoft Outlook®, Email Archiving and smartphone access in a business setting.

Hosted email is gaining traction in enterprises as more companies realize they no longer have to hassle with managing their own email servers, and would rather focus the time and resources to innovate in their business.

“We wanted to take advantage of a business class cloud-based email system that many providers couldn’t offer. Many of our users wanted the same user experience as Microsoft Outlook and access on mobile device,” said Kevin Durawa, IT Manager, RealtyUSA.com.  “We are pleased with the ability to mix traditional Web and POP/IMAP clients with exchange depending upon the needs of our users. Rackspace has made transitioning over 2200 email accounts from our in house system to Rackspace seamless! Their continued support has been outstanding as well.”

A compelling offering that has significantly contributed to Rackspace’s momentum is Hybrid offering, a custom mix of hosted Microsoft Exchange and the business-focused Rackspace Email platform on a single domain, that results in significant cost savings for businesses. For example, using an average 80/20 ratio of Rackspace Email to hosted Exchange, businesses can save more than 60 percent on email with Rackspace Hybrid Email compared to hosted Exchange alone, and significantly more than hosting their own email in-house.

The growth in hosted email mailboxes can also be attributed to Rackspace’s strong reseller program and partner community, who gain a competitive advantage by being able to provide customers with the Rackspace services. “Cloud-based email is doing extremely well, we are hearing more and more from our partners and resellers that the enterprise and SMBs alike are turning to cloud-based email, and especially offerings like Rackspace’s Hybrid Email, for their email needs,” said Darryl Parker, President and Owner, Parker Web Services.

About Rackspace Hosting

Rackspace Hosting is the world’s leading specialist in the hosting and cloud computing industry. The San Antonio-based company provides Fanatical Support ® to its customers, across a portfolio of IT services, including Managed Hosting and Cloud Computing. For more information, visit www.rackspace.com.

Forward Looking Statements

This press release 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 development, past performance or market acceptance associated with our email products and services; anticipated operational and financial benefits from our email 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, technological and competitive factors, regulatory factors, the effectiveness of managing company growth, and  other risks that are described in Rackspace Hosting’s Form 10-Q for the quarter ended June 30, 2010, filed with the SEC on  August 9, 2010. 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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Rackspace and Fanatical Support are registered trademarks or trademarks of Rackspace US, Inc. in the United States and other countries. Microsoft, Microsoft Exchange Server and Outlook are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of other companies and products mentioned herein may be the trademarks of their respective owners.

For more information, please contact:

Rackspace Hosting

Samantha Swaim

210-312-3650

samantha.swaim@rackspace.com