DO is for people who want root access to a commodity VM at the lowest price possible.
Rackspace is for people who want root access to a commodity VM and are willing to pay more for support.
AWS is for people who are willing to ditch commodity VMs and replace them with orchestrated services. (They'll sell you a commodity VM via EC2, but if that's all you want there's not a lot of reason to go with them.)
Rackspace's problem is that this segmentation puts them in the awkward position of being the wrong choice for the extremely price-sensitive (who go with DO 'cause it's cheap, or with even cheaper alternatives like Dreamhost) and the wrong choice for the "money is no object" crowd (who go with AWS, because at scale working with orchestrated services is much easier than managing huge fleets of persistent VMs). Which ends up not leaving a whole lot of people for them to sell to.
Rackspace is for people who want root access to a commodity VM and are willing to pay more for support.
AWS is for people who are willing to ditch commodity VMs and replace them with orchestrated services. (They'll sell you a commodity VM via EC2, but if that's all you want there's not a lot of reason to go with them.)
Rackspace's problem is that this segmentation puts them in the awkward position of being the wrong choice for the extremely price-sensitive (who go with DO 'cause it's cheap, or with even cheaper alternatives like Dreamhost) and the wrong choice for the "money is no object" crowd (who go with AWS, because at scale working with orchestrated services is much easier than managing huge fleets of persistent VMs). Which ends up not leaving a whole lot of people for them to sell to.