Will Cisco’s $1bn Intercloud bridge the way for enterprise customers?

The networking giant’s bid to build an open, hybrid cloud ecosystem could be good news for buyers - but analysts say its vision needs more clarity

Cisco is investing $1bn over the next two years to create what it claims will be the world’s largest open, interoperable cloud network that lets customers easily shift workloads across public and private clouds, locations and service providers. 

The company plans to deliver hybrid cloud infrastructure services, dubbed the "Intercloud", through an extensive network of global datacentres – both its own and those of third-party providers.

Cisco announced the move at its Partner Summit in Las Vegas earlier this week, along with a starting line-up of supporters that included Australian communications company Telstra, Atos-owned European cloud provider Canopy, global technology distributor and cloud service provider Ingram Micro, managed service provider Logicalis, business intelligence platform provider MicroStrategy and Indian-owned outsourcing giant Wipro.

The Intercloud will be built on the open-source cloud platform OpenStack, using Cisco’s Application Centric Infrastructure (ACI) to optimise the performance of applications and accelerate the roll-out of new services. Robert Lloyd, Cisco’s president of development and sales, said: “We plan to support any workload, on any hypervisor and interoperate with any cloud.”

Cisco believes this open approach will allow a competitive market for cloud services to develop by ensuring customers can easily combine and move workloads – including data and applications – according to their particular requirements in terms of security, scalability, price, service levels and data sovereignty (the physical location or jurisdiction in which particular information resides).

This will be a cloud truly built for the internet of everything, capable of scaling to billions of connections and trillions of events

Fabio Gori, Cisco

Blogging on the announcement, Cisco’s director of worldwide cloud marketing, Fabio Gori, said: “This first-of-its-kind, global, open, public network of clouds represents the next phase in cloud computing. 

"This will be a cloud truly built for the internet of everything, capable of scaling to billions of connections and trillions of events, offering customers unmatched flexibility to integrate their private, public and hybrid cloud capabilities to achieve business advantage.”

Analysts remain unconvinced

Cisco has spotted an opportunity – many customers are clamouring for the industry to make it simpler for them to deploy, manage and migrate applications and data across a variety of clouds, providers and cloud services. But although the company’s logo represents San Francisco’s Golden Gate Bridge, some analysts believe Cisco could find the task of shoring up customers’ support for its proposition a bridge too far – unless it stops clouding the vision with marketing speak and starts making its proposition more concrete.

I really think it needs to rein itself in slightly and sharpen up the messaging

Clive Longbottom, Quocirca

“It could be good, but I worry about the messaging,” said Clive Longbottom, co-founder and service director of analyst firm Quocirca. “Cisco is dong the perennial supplier thing of going, ‘hey, we've got the answer – now, what was your problem?’.  It seems to be saying the Intercloud (itself a very tongue-in-cheek term) is not only a silver bullet, but a universal panacea. I really think it needs to rein itself in slightly and sharpen up the messaging.”

David Bradshaw, research manager for cloud services at analyst IDC, also believes Cisco needs to put some more flesh on the bones before anyone can properly judge the merits to enterprise customers of the expanded Cisco Cloud Services portfolio, to give the Intercloud a more corporate title.

“We don’t yet know enough about the strategy to say whether or not it’s likely to pay off for Cisco,” Bradshaw said. “A billion is a large investment for any company, so it’s obviously serious, but moving from being a major equipment provider to offering infrastructure cloud services means adopting a very different business model. 

"Cisco does have some experience with cloud services so I assume it knows what it’s taking on, but I do wonder how it will work. I’d like to know the balance between public and private cloud it will have, for example.”

Among the possible problems he envisages is a conflict between Cisco and its cloud partners. “The company is positioning this as a collaboration with partners. While that is strategically sensible, Cisco has to be very careful not to tread on any of their toes because they are also the company’s customers, using its technology to deliver cloud services,” Bradshaw said.

Indeed, the most recent figures from Synergy Research Group show Cisco was the leading supplier of the cloud infrastructure equipment in 2013 with a market share of around 14.6%.

But the 30-year-old industry veteran has historically held its own pretty well against younger (and older) industry players (even becoming, at the height of the dotcom bubble in 2000, the most valuable company in the world). And John Chambers, Cisco’s CEO for almost 20 years, is not a man to be underestimated.

While It might be too early to tell if the company has the right cloud formula to re-open the golden gates just yet, one thing is certain, it is still a very long way from the pearly ones.

Read more on Cloud computing services