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Can Cisco Help SPs Offer Cloud-based Apps?

Dan O'Shea

Cisco Systems has confirmed to Light Reading that it is launching a $1 billion cloud services effort focused on creating an application-driven "cloud of clouds," aimed at service provider partners and enterprises. (See Cisco Set to Launch Cloud Services.)

By creating the infrastructure to deliver cloud-based apps, the new Cisco Systems Inc. (Nasdaq: CSCO) initiative could particularly appeal to network service providers that have yet to roll out their own cloud services, by giving them a platform on which they can develop differentiated services.

Mike Riegel, vice president of marketing at Cisco Systems Cloud, says the Cisco Global Intercloud will (no surprise here) be built on the Intercloud platform the vendor announced in January. This enables cloud users to move resources between different types of clouds -- public, private or hybrid (See Cisco Goes Soft With APIC, Intercloud Announcements.)

He adds that some of Cisco's $1 billion commitment will go toward building data centers built using Cisco's own hardware, storage and computing solutions, with Cisco becoming its own good customer at a time when it is being challenged in its core hardware business. Riegel says Cisco will offer further details of its data center build-out plan at Cisco Live in May.

Cisco is making this move because it sees the cloud services market moving beyond infrastructure as a service, or merely providing compute, storage or even network services, Riegel says. "The cloud market has moved on," he comments. "Today it's all about providing business-specific apps provided from the cloud with good customer experience." (See Verizon: Major Apps Move Cloud-ward in 2014.)

The vendor plans to offer its Global Intercloud via its own channels, as well as a band of Cisco Cloud Services partners, a group that already includes Australian telco Telstra Corp. Ltd. (ASX: TLS; NZK: TLS). "The first thing our service provider customers will tell you is that you can't go it alone any more," Riegel says. "So, for example, customers will be able to get a whole range of offerings from Cisco, from Telstra and from all of the other partners in Intercloud. Cisco will go to enterprise customers, but service providers will also be able to create their own offerings on top of Cisco capabilities and bring them as their own brand or co-brand them with Cisco." (See Telstra Extends Cloud Capabilities With Cisco.)

Cisco will need to coordinate with its service provider partners, and vice versa, to ensure service differentiation, but Riegel says the intent is to create a broader selection of cloud services, each with their own added value, for customers. "It's about what the application workloads are," he says. "We'll mix and match with our service provider partners to make them successful."

Those partners also will be able to leverage Cisco's managed threat defense capability, announced last week, to scan security threats across distributed cloud environments. They will also be able to use this distributed infrastructure to comply with regulatory requirements that restrict where data can and can't be stored.

"We're in the post-Snowden era," Riegel says. "Increasingly, companies are wanting data to stay in the country of origin. We can enable that."

The announcement may be the latest and biggest indicator that the networking hardware giant is undergoing a major philosophical shift in what it produces and how it sells the fruits of its labor. "Everyone competing on the same infrastructure basis -- that's not an interesting market any more," Riegel says. "We're evolving to a services/solutions/software model. We will continue to be successful in infrastructure."

In the cloud market particularly, he acknowledges that Cisco needs to be much more than an "arms supplier, as we have done in the past." As for potentially competing with its service provider customers by selling direct to enterprises, Riegel says the cloud market will be like other markets, such as video and conferencing, where Cisco goes to market in multiple ways, and does so successfully.

— Dan O'Shea, Managing Editor, and Carol Wilson, Editor-at-Large, Light Reading

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sam masud
sam masud,
User Rank: Light Sabre
3/25/2014 | 3:23:12 PM

You write: "He adds that some of Cisco's $1 billion commitment will go toward building data centers built using Cisco's own hardware..."

Seems to me this is a great way for Cisco to increase its data center business--particularly if you're competing with VMware.


C Chappell
C Chappell,
User Rank: Blogger
3/25/2014 | 9:32:55 AM
Cisco and Intercloud
Heavy Reading research shows that telcos are lagging when it comes to having the kind of cloud infrastructure they need to compete with the cloud leaders, ie an infrastructure that is low cost enough, highly integrated, based on the latest and most innovative technologies and that leverages carrier network strengths. Only a handful of telcos, cf Verizon, are prepared to invest in building such infrastructures themselves. A high proportion of early adopter telco cloud providers started out with VCE and the idea of having a common inter-cloud provider, VCE-based infrastructure is not new. At the same time, telcos have also been struggling with the SaaS broker opportunity, a point not lost on Huawei and NEC which already have cloud app partner programs. So the fact that Cisco is sharpening its strategy on all these fronts is unsurprising. It is a channel partner play (for infrastructure) that is taking Cisco into IBM/Softlayer, HP and Microsoft territory - but arguably with added carrier networking kick.
User Rank: Blogger
3/24/2014 | 5:19:28 PM
Re: Whatever did we do before apps?
That's a good question, and is maybe the eternal question regarding Cisco. Cisco has said in the past enterprise customers don't want to be stuck with one cloud environment. They want to use private, public and hybrid clouds of their choice depending on the workload, which is why Cisco wants to manage the stitching between those clouds. They seem to be looking for a business model for the day when no one has use for their hardware anymore, though they might put it differently.

I'm starting to think they carefully outline service provider partnerships for us just because we keep asking if they are going to compete with their provider customers or partner or what. Maybe in the market, the conflict rarely comes up, since we never actually hear much about something like "Cisco hit on a Verizon customer, and Verizon got mad." --Does this ever actually happen?

No, I don't think this does answer your question.
Carol Wilson
Carol Wilson,
User Rank: Blogger
3/24/2014 | 4:53:06 PM
Re: Whatever did we do before apps?
Here's their explanation: The telcos can take the Cisco platform and add their services - voice, conferencing, data - to the package to differentiate, and then sell it to the enterprise folks they are already providing data services to, as part of the package. 

There is no doubt that telecom service providers are now including cloud services in the data/managed service sales pitches. I realize some people - including one on this thread - are serious skeptics as to whether they can succeed at this. 

As for Cisco competing with its customers, they do it all the time now, selling gear direct to enterprises and through channels that their SP also package and sell with their data services. I don't know how Amazon would respond to this, but they continue to seem unfazed by cloud competition from the telecom sector.

User Rank: Light Sabre
3/24/2014 | 4:47:13 PM
Re: Whatever did we do before apps?

Why does Cisco think that the carriers have a better into Enterprise Cloud Apps than Cisco itself does?  Isn't Cisco one of the worlds largest vendors to the Enterprise already?

As described this seems to be a channel play, when you already have one of the largest direct Sales Forces calling on the exact same customer.  Or am I confused somehow?

Maybe as a better way of describing my confusion, would be to parrot back Carol's comment with.  If Cisco can sell some Cloud Stuff to Enterprises, who cares what caririer is the bit pipe for it?


Mitch Wagner
Mitch Wagner,
User Rank: Lightning
3/24/2014 | 4:44:21 PM
Compete with own customers
Cisco seems to be running the risk of competing with its own customers here, most notably Amazon.
Carol Wilson
Carol Wilson,
User Rank: Blogger
3/24/2014 | 3:42:35 PM
Whatever did we do before apps?
Now the cloud-world is ready to go app-crazy. Service providers could well find it appealing to turn to a known quantity but if this is going to be a significant set of future servcies, do you want it built on a single vendor's technology?
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