"Rackspace could have chosen to just bury its head in the sand and pretend cloud would just go away. Instead, it’s decided to get in the cloud game itself, even if that undermines and takes revenue away from its core managed hosting business."

ISPs will need to make tough decisions as the webhosting space is itself disintermediated by sophisticated software and services that make it easier for customers to buy less.

Wainewright says that Rackspace will further lower costs in the space by investing in SaaS:

"My big takeaway is that Rackspace becoming a cloud provider represents a huge step towards the mainstreaming of cloud. Not only because a major managed hosting provider has embraced cloud -- and declared it the future -- but also because Rackspace is the kind of company that will add GUIs and application interfaces to make its cloud resources more accessible than Amazon’s more geek-targeted service. 'We really think this is going to open up the cloud to a bigger market,' said Moorman. I agree."

The companies that lead our industry are gathering a portfolio of services that will give them the power to change it. These are not monopolies, but truly best of breed companies thriving in an industry that has real competition.