Cisco pledges $1bn for its Intercloud network

Cisco has announced that, together with a number of partner companies, it will build the world’s largest global network of clouds – what it calls “the Intercloud”. It says that it is being architected for the Internet of Things (or the Internet of Everything, as it insists on calling the M2M sector), with a distributed network, unique security, real-time analytics, “near infinite” scalability and full compliance with local data sovereignty laws.

This hybrid Intercloud will be open to all developers and will feature APIs to encourage easy application development, and the intention is to deliver a new enterprise-class portfolio of cloud IT services for businesses, service providers and resellers. To achieve this, Cisco said it will invest over $1 billion over the next two years.

“The timing is right for Cisco and its partners to invest in a groundbreaking, application-centric global Intercloud to provide broader reach and faster time to market,” said Robert Lloyd, president of development and sales at Cisco. “Together, we have the capability to enable a seamless world of many clouds in which our customers have the choice to enable the right, highly secure cloud for the right workload, while creating strategic advantages for rapid innovation, and ultimately, business growth.”

The Intercloud will be hosted across a global network of Cisco and partner data centres, to support the varied business needs of private, public, and hybrid clouds. Lloyd says that its customers are looking to create open and highly secure hybrid cloud environments, and they want to rapidly deploy enterprise-class cloud experiences for their key customers, “all while mitigating the risk of capital investment”.

He adds that he expects to expand the addressable cloud market for Cisco and its partners from $22bn to $88bn between now and 2017.

Cisco also hopes it will accelerate the build-out of the Internet of Things – a market it values as a $19 trillion economic opportunity in the coming decade, and which it says is creating a new set of requirements for globally distributed and highly secure clouds.

Partner companies who have already endorsed the Intercloud initiative include Australian telco Telstra, Allstream, Atos and Wipro.

“Applications are critical to delivering business value and we believe we can offer a differentiated solution for managing applications across clouds,” said Erez Yarkoni, Executive Director Cloud, Global Enterprise and Services at Telstra. “Our customers will now [be able] to select the cloud service to meet their requirements and scale network and cloud resources to deliver service agility, security and performance.”

Cisco is playing catch up in this area. Rival services including IBM Softlayer, HP Converged Cloud and Amazon Web Services are already up and running, with AWS generating around $3.5bn of revenues per year.

But Cisco is relying on the problems surrounding data sovereignty and residency to give it a competitive edge. It’s not going to build out its own infrastructure, rather it is relying on the networks of its partners – with everything based on Cisco’s Unified Computing System. With established data centres around the world, run by local companies, Cisco can offer a more targeted service to those businesses that face legal requirements over the hosting of their data – for example, not being able to use or host their data overseas. This is becoming a problem for the likes of AWS, who have fewer and more centralised data centres.

Although $1bn sounds like a huge amount of investment, in this sector it won’t go far. Cisco’s rivals have spent far more than that. The firm still has a lot of work to do if it wants to be a credible player in the full service enterprise cloud market. Mind you, with some $47bn in cash and short-term investments, Cisco could afford to investment more funds.

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