Shares in managed cloud hosting company Rackspace, Inc. surged Monday on further rumors that the company will be announcing a partnership with Amazon.com, Inc. later this week.

Exactly what the deal involves is still subject to speculation, but it is believed at the very least that Rackspace will offer enterprise customers the ability move their hosting into Amazon’s cloud, an interesting move given Rackspace itself has long been a competitor with Amazon for cloud-based hosting services.

Rackspace’s Startup Liaison Officer Robert Scoble all but confirmed that the announcement was forthcoming, with a post on Facebook that reads:

Remember when I worked at Microsoft and said nice things about Google? Well tomorrow you will learn why that strategy of being nice to my competition pays off. You never know in this business who your business partners will be.

As we reported when the rumors first surfaced late last week, the deal sounds as though it may be similar to the one Rackspace made with Microsoft earlier this summer, where it provides support and acts as a reseller for Microsoft Azure, with the option of hosting on its own cloud infrastructure.

At the time of that deal Rackspace Chief Technology John Engates outlined a plan and noted further that “when you start to blend Rackspace’s services and support into the mix, and those things become a bigger and bigger proportion of the check that our customers write us every month, the penny or two of infrastructure difference fades into the background.”

Cloud consolidation?

The move by Rackspace to become a third party provider of services from other companies is a decided shift for one of the bigger cloud hosting companies, and could show a shift in the space away from broadscale, often cut-throat competition, towards some consolidation in the market.

Perhaps the move may even be representative that the constant push towards lower and lower cloud hosting prices is also one that needs enormous scale and support to keep up with, and although Rackspace is no minnow, it doesn’t have the scale of Google, Microsoft or Amazon.

Whatever you think of the changes though the market seems to like the potential deal with shares in Rackspace trading up 6.61 percent to $25.87 at the close of markets Monday.

The deal is expected to be announced at the AWS re:Invent Conference, which runs from October 6 through to October 9.

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