Cisco is set to unveil a cloud computing service on Monday that will pitch the networking technology giant against the likes of Amazon Web Services Inc. (AWS), according to a report in the Wall Street Journal.
And the router giant is looking to the telco sector to support the hosted offering, dubbed Cisco Cloud Services: It has already signed up Australia's Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) and Canadian business services specialist Allstream Corp. as partners. (See Telstra Extends Cloud Capabilities With Cisco and Are Telcos Still Playing Cloud Catch-Up?)
According to the report, the vendor, which already sells its networking hardware to companies (such as telcos) that are building their own cloud services infrastructure, will invest $1 billion during the next two years on the data center infrastructure needed to support Cisco Cloud Services, which is due to be presented to potential customers today.
The move suggests that Cisco is feeling the impact of existing infrastructure-as-a-service (IaaS) offerings: As more companies sign up to use shared, hosted IT (compute, storage, networking) capabilities, so they have less need to invest in their own IT infrastructure, which for many includes networking hardware from Cisco.
By offering a cloud computing service, Cisco will, in effect, be leasing capacity on its managed infrastructure to enterprise customers, generating revenue from its products through a different business model.
The market for IaaS services is growing rapidly -- various industry projections put the annual growth at around 40%, while Cisco estimates the market was worth about $15.6 billion in 2013 -- and is starting to generate significant income for those that moved early. While Amazon doesn't report the revenues from its AWS division, analysts estimate that it generated sales of $1 billion in the fourth quarter of 2013.
Other companies that offer cloud computing services include Computer Sciences Corp. (CSC), Microsoft, Rackspace Hosting, Dimension Data, Verizon Terremark, CenturyLink Technology Solutions (formerly Savvis), HP, IBM, and many others. (See Verizon Scores Oracle Cloud Breakthrough, CenturyLink Cloud Goes Hyper, and Windstream Makes Regional Cloud Play.)
— Ray Le Maistre, , Editor-in-Chief, Light Reading