Hewlett Packard Enterprise (HPE) and Rackspace teamed up on private cloud and will soon offer a managed private cloud service for enterprises based on OpenStack with pay-as-you-go pricing.

The OpenStack Private Cloud, which will be available Nov. 28, will give companies public-cloud like benefits such as utility pricing and scalability in a private cloud environment — either their own data center, a colocation facility, or a Rackspace-managed data center, said Rackspace EVP of Private Cloud Scott Crenshaw.

It will also cost about 40 percent less than Amazon Web Services (AWS), he added.

“Pay-as-you-go will bring more workloads into the private cloud umbrella,” Crenshaw said. “In addition to the benefits of private cloud, such as ease of migration, compliance, security — in some cases performance — this is provided at a cost that is about 40 percent less than you’d see using equivalent services from AWS.”

To be clear, Crenshaw isn’t saying enterprises should immediately dump all of their AWS workloads. “We believe the world is a multi-cloud world,” he said.“What we’re trying to do is provide a platform that is a good compliment to AWS and similar public cloud services.”

Rackspace and HPE plan to offer similar pay-per-use private clouds based on VMware and Microsoft Azure Stack next year.

IDC forecasts this type of consumption model, which allows businesses to handle burst capacity and traffic spikes without paying for additional fixed capacity, will account for 50 percent of on premises and off premises physical IT and data center asset spending by 2018.

Under the deal, HPE will provide its Gen10 servers and financing, while Rackspace will provide cloud software, orchestration, and management. As with all of Rackspace’s managed private clouds, this one is single-tenant. “There’s nothing shared,” Crenshaw said. “Even the on-demand capacity is single tenant.”

The new service follows a slew of on premises private cloud infrastructure offerings announced in the past few months including Microsoft Azure Stack, Oracle Cloud at Customer, and a Cisco-Google hybrid cloud planned for next year.