Cisco's big about-face on cloud services

Three years after pledging not to, company is now becoming a cloud service provider with eyes on Amazon, Google

Three years ago as part of a comprehensive cloud strategy, Cisco pledged to address every aspect of cloud except services – it did not want to compete with customers. 

What changed?

Cisco is now getting into cloud services with a $1 billion, two year investment to expand its cloud business, including building a global Intercloud of public, private and hybrid cloud environments.  The Intercloud will be designed to deliver enterprise-class cloud IT services for businesses, service providers and resellers, with the ability to move application workloads between public, private and hybrid clouds and cloud providers (http://www.networkworld.com/community/blog/ciscos-1-billion-bet-cloud-may-pay?source=nww_rss).

+MORE ON NETWORK WORLD: Cisco puts enterprises under Insieme control +

The Intercloud will ostensibly compete for those workloads with Amazon Web Services. Cisco plans to move its own workloads, inherited from the acquisition of several companies that were AWS customers, from AWS to its own Intercloud, says Nick Earle, Cisco senior vice president of cloud sales and go-to-market.

Amazon is also a Cisco customer, Earle says.

“There’s money to be made around application differentiation,” Earle says, referring to the Intercloud’s emphasis on optimizing the performance of business applications like SAP HANA through Cisco’s recently announced Application Centric Infrastructure (ACI) APIs. “Workloads from smaller acquisitions that were hosted on AWS, we’re going to put them on our own Intercloud node.”

This is a reversal from a pledge made in December, 2010, by Lew Tucker, Cisco’s Cloud CTO, not to enter into the cloud services market and compete with the likes of Amazon, Google and other cloud providers. Cisco would instead focus on being an “arms supplier” to those firms by supplying infrastructure, lining up partners, and developing platforms and technologies to accelerate cloud adoption.

Earle says Intercloud fulfills that third prong and is an enabler for customers and partners, not a competitor.

“People building hybrid clouds is a big issue,” Earle says. “They want to get control back…and we’re enabling that. They can connect to us or to our Intercloud partners. This is designed so we’re not competing with partners; we built this based on briefings with our partners. We definitely built this in a way that gives choice to partners.”

Intercloud and Cisco Cloud Services partners include Telstra, Allstream, Canopy, Ingram Micro Inc., Logicalis Group, MicroStrategy, Inc., OnX Managed Services, SunGard Availability Services and Wipro Ltd.

Analysts say moving into cloud services is vital for Cisco’s ambitions to become the No. 1 IT company in the industry.

“They’ve been looking to become the No. 1 IT company for years,” says Zeus Kerravala of ZK Research. “Cloud is the way to do that.”

Kerravala also sees Intercloud and Cisco Cloud Services as an enabler for cloud providers, rather than a competitor.

“There could be channel conflict but Cisco’s managed that historically,” he says. “If done correctly, it’s something their partners need. Cisco doesn’t want to be one of the hundreds of cloud providers out there, it wants to be a catalyst for the cloud.”

Kerravala notes that Cisco has already played in the cloud services arena through SaaS offerings such as WebEx web conferencing, Meraki WLAN, Cisco Cloud Web Security, hosted collaboration and cloud DVR.

Earle says application-focused cloud services that include mobility among public, private and hybrid clouds is where the money is.

“The (profit) margin is in the applications, and solving hybrid cloud issues,” he says.

Jim Duffy has been covering technology for over 27 years, 22 at Network World. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy.

Join the discussion
Be the first to comment on this article. Our Commenting Policies