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March, 2014

Cisco Fully Enters the Cloud Market – The Intercloud

Today Cisco announced that they were investing $1B over the next two years to expand their “Cisco Powered” cloud initiative.   For those that aren’t aware…the Cisco Powered Cloud program is one that allows service providers to build hosting environments on top of Cisco equipment in exchange for incentives, marketing, etc.  It’s a way for Cisco to offer IaaS without actually having to build all of it out, like vCHS or AWS.  It also provides a good way for Cisco partners to sell services in to those colocation centers.

On the surface this appears to be a pretty logical next step for Cisco.  Build out with more partners…interconnect the clouds.  Utilize Cisco technologies and services.  There are some advantages to what Cisco is doing in comparison to their competitors.

First, they can expand much faster.  One big point of Cisco’s strategy is to offer their services locally in as many countries as possible to ease problems with regulatory compliance and keep data within a specific country.  VMware could do this with vCHS but they’d have to build out their offering in more data centers across the world which is expensive.  Cisco can lean on their partners in those areas and just have them do it faster.

Second, they have the technologies to solve one of the largest problems with deploying a hybrid cloud strategy for most organizations…network and security.  Cisco has ACI (Application Centric Infrastructure) which allows for easily movable policies.  They have good automation and orchestration tools…though not as out-of-the-box ready as say vCAC when you look at it for on-premise deployment.  If Cisco is aiming for a true hybrid solution with tight integration to a private cloud they have some work to do.

But is that enough?

Will Cisco be able to win customers away from AWS, Azure, vCHS, RackSpace, and others?  A lot of it, I think, depends on who they target.  Cisco is promising “an expanded suite of value-added application- and network-centric cloud services to accelerate the Internet of Everything” and “APIs for rapid application development”.  Very exciting if you are writing the new generation of applications.  Less exciting if your goal is to get your organization out of the datacenter business and offload those legacy apps to a hybrid cloud environment.

But…which do people want?  Interesting question and one that I was discussing with a few others while also writing the beginning of this post.  I think the answer is both.  There are a ton of legacy apps that aren’t going away soon and we (Varrow) are constantly working with customers to move those to a good hybrid solution such as vCHS.  It’s easy to integrate in to an existing VMware environment.  You can move your VMs up without any conversion or changes to the system.  Smooth.

But, there are many new apps being developed and old apps being replaced that are moving to better architectures.  In this world people don’t care that Cisco’s offering is on OpenStack and there most likely won’t be easy migration paths in the beginning.  That’s not the purpose.

In to the future….

Cisco is making some serious moves lately and I expect that to continue.  They are very strategic in nature.  If you look at these in the short term they don’t always make sense…but you need to step back.  Cisco has a lot going for them.  They have money in the bank to spend on investments like this or future acquisitions.  They have an excellent portfolio of datacenter technologies.  They have a long history of relationships with customers.  I wouldn’t bet against them.

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