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Summary:

The Internet of Things explosion means there isn’t enough cloud for all workloads. That’s what Cisco says it’s addressing with its global cloud federation effort.

John Chambers, Cisco CEO

Cisco Systems, which has portrayed itself as a sort of arms dealer to would-be cloud providers – the arms being routers, UCS hardware and some software — is taking that a step further with its plan to build out a federated “intercloud” with partners that presumably will build out that cloud of clouds atop — you got it — Cisco hardware.

The company said it will spend $1 billion to work alongside Telstra and other unnamed telcos to construct the “world’s largest global intercloud.”

Skeptics might say this is a bit late — given the billions that IBM, HP, and other legacy hardware players have poured into their own cloud efforts, not to mention Amazon Web Services’ prodigious lead in public cloud. But Cisco is banking on the notion that we’re onto the next stage of cloud, where it’s not all about infrastructure any more.

If that’s the case, the company might be able to make good on CEO John Chambers’ pledge to become the world’s biggest IT company. If not? Well, it’s not for lack of trying.

“The first wave was infrastructure, now it’s about apps. Companies want help addressing the internet of things and one cloud is not enough,” said Mike Riegel, Cisco’s VP of services marketing said in an interview. Cisco’s aim is to spur the construction of multiple mega clouds, that don’t care what hypervisor or workloads you run, and it’s doing so with its OpenStack-based software stack. Cisco has been a big contributor to OpenStack and Lew Tucker, Cisco VP and CTO is on the OpenStack Foundation board.

Riegel said important partners here include Canonical and Red Hat. He made no mention of VMware, with which Cisco has enjoyed a stressful relationship but when asked he said VMware remains an important Cisco partner.  In this cloud effort, Cisco and partners will use the various “acceleration packs” it built to make OpenStack more easily deployed and will also parlay SaaS lessons learned from Cisco’s Webex business.

Asked if Cisco hardware is table stakes in this cloud building boom, Riegel said cloud service providers will “build a lot of this on UCS and our evolved network infrastructure but we will also make our APIs open and published.”

This is indeed an expansion of the company’s core strategy, which has been to deliver building blocks of hardware to IT. It places much more emphasis on software and services, which are a bit more alien to Cisco. Still, at its heart, to me this smacks of Cisco trying to find more markets for its non-commodity (pricey) hardware at a time when most webscale cloud providers are moving to cheaper, plain vanilla building blocks.

 

 

 

  1. Barb, you said “… with partners that presumably will build out that cloud of clouds atop — you got it — Cisco hardware.”

    But, over time, there may be situations were the Cisco Intercloud strategy actually results in more open standard bare-metal systems being deployed as Open Hybrid Cloud infrastructure.

    Therefore, the interesting space to watch will be the progressive shift in Cisco’s profit margin as it moves from hardware- to software-based revenue streams, while the market as a whole becomes more “software defined”.

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