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Cloud Computing: Cisco to Spend $1 Billion to Build a ‘Star Alliance’ of Cloud Technology Leaders
Cisco has announced that it plans to spend $1 billion over the next two years in order to create a public cloud offering that they’re calling the “Intercloud“. The new service would compete against similar services offered by Amazon Web Services and Google Compute Engine.
Cisco’s ‘Global Intercloud’ is intended to provide interoperability between cloud services. Cisco claims that their vision will enable better analytics, increased security, and scalability. The goal is to create a ‘Star Alliance’ of technology companies that will participate with Cisco in delivery services on the Intercloud.
Robert Lloyd, president of development and sales at Cisco, said that the proposed Cisco cloud project “will offer an expanded suite of value-added application- and network-centric cloud services to accelerate the Internet of Everything… This networked connection of people, data, processes and thing, is expected to be a US$19 trillion economic opportunity in the coming decade. The Internet of Everything movement, which is creating an entirely new set of requirements for globally distributed and highly secure clouds, has empowered Cisco and its partners to initiate the development of the Intercloud to deliver the mobile, collaborative and rich video cloud services that enable today’s new connected experiences.”
But it may not be easy. Obstacles that Cisco will need to overcome in order to be successful in building out public cloud infrastructure include:
- Cisco is starting from scratch while others like Amazon, Google and Microsoft have a huge lead
- Cisco has built up core competency in hardware operations, and that may not translate well to being able to create a business around the cloud as a service
- Cisco is a big company and, like most big companies, moves slowly
- Cisco will also need to come to terms with the cloud business model where margins are razor thin, compared to the 60 percent margins Cisco gets from hardware
