Cisco Tosses $1B Into a Cloud

March 24th, 2014 by · 2 Comments

According to the Wall Street Journal this morning, Cisco has big plans to evolve beyond the mere networking gear heavyweight of our time. They're planning to make a late, dramatic entry into the world of cloud computing services today. And by dramatic I mean with at least $1B in cash on tap and ready to spend over the next couple years. 

cloud

Most of that money will go into building the data centers themselves and filling them with servers. They won't be aiming directly at Amazon, only obliquely. And they don't seem to be aiming directly at the enterprise markets their telecom and infrastructure customers are either.

No, it seems to be aiming at its current customer list, hoping to offer cloud services that telecommunications companies can integrate into their own offerings. In other words, they're hoping that telecommunications operators worldwide will outsource some of their cloud services to a familiar name. Telstra is named as an early partner, for example.

Cisco has been under pressure lately, as being the market bellwether for US vendors has made them a big target and new technologies like SDN will likely keep them on the defensive. But John Chambers doesn't think small, and this is clearly a piece of his way of shifting the company toward the next phase of infrastructure.

The $1B will go quite a ways, but I'm curious how long it will take to get a portfolio of cloud services to market.  For that matter, what will be in that portfolio?  And does Cisco have the DNA necessary to do this sort of thing?

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Categories: Cloud Computing · Telecom Equipment

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2 Comments So Far


  • Grant Lewis says:

    Interesting for a couple of reasons.

    (1) There were no big SP’s named (NTT, BT, ATT, VZ, etc) in the announcement which leads me to believe they are either to be announced and or Cisco’s working on how they will carry the lion share of the services. Maybe this is an oversight but likely deliberate.

    (2) The services clearly being offered are aligned with cisco’s overall services and would position more of the base to be on cisco gear than end up on open source / non cisco vendors. Obviously they don’t want to be cannibalized by other vendors who are moving in aggressively.

    (3) Cisco will invariably feel the affect of this announcement similar to what VMWare felt when they too announced their movement into the cloud. If cisco isn’t careful and share the “wealth” accordingly it may be seen as cannibalizing its partners for its own survival. Wouldnt be the first time – look no further than VMware, MSFT, etc when they did what they did entering the cloud. The challenge is the line in the sand is drawn and you are either on the good side or the wrong side. If you’re on the wrong side you’re quickly looking for alternative partners to help carry you forward though it would take some time for folks to leave cisco and thus have cisco feel the pain b/c they have the stranded capital likely depreciating as i type this.

    So all in all careful calculation by cisco will either lead to great things for its partners/customers and or set some to the side. Either way its too early to tell what will happen.

  • Agree, it has to go this way.
    However margins are tighter than they used to be and in the FMC space this is often still a small first-time set up for even larger providers.
    Dynamism plays a part and we certainly find ourselves invited to the table.

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