The Global Intercloud: A Whole New Ball Game for Cisco

Cisco makes the jump into services, but can it make the switch from dominant player to hungry newcomer?

By Arthur Cole | Posted Mar 28, 2014
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For a long time, the IT industry was characterized by the vendor-client relationship. Vendors made products, which clients bought and folded into growing, but still largely manageable, enterprise infrastructure.

As infrastructure became more distributed and complex, however, that relationship began to change. The enterprise needed end-to-end systems that addressed specific problems, leading to the rise of large, integrated platforms and longer-term, cooperative agreements with the companies that developed them. Today, systems are out, solutions are in, and the vendor-client paradigm has been replaced with long-range partnerships and coordinated development strategies.

As the industry becomes more cloud-like and software-defined, this model is starting to transcend mere infrastructure to incorporate the application and service layers as well. In a few short years, the idea of building infrastructure first and then populating it with the tools you need to perform a function will seem almost quaint. Provisioning will be based on the desired solution, and any distinction between the actual components of that solution will be of little or no consequence to the user.

Enter Cisco and its new Global Intercloud. For a long time, we heard that Cisco would remain an infrastructure company and had no interest in competing with the likes of Google and Amazon over cloud services. Now, it seems reality has set in. As HP, IBM and others have already realized, you cannot be a solutions provider to the enterprise unless you have a top-to-bottom solutions portfolio. That includes services. To its credit, the company has deftly worked both OpenStack and its own Application Centric Infrastructure (ACI) platform into what could very well be a leading provider of professional B2B cloud environments.

Much has already been made of the $1 billion that Cisco has ponied up for the project, but the more interesting aspect is the range of partners that have agreed to take part. These include broadband providers like Australia’s Telstra and Canada’s Allstream, service and solutions vendors like Logicalis and Sungard, and even integration specialist Ingram Micro. Clearly, the idea is not just to build an integrated solutions stack that can deliver services quickly and easily, but to unite all these disparate resources using Cisco platforms.

In one quick move, then, Cisco has jumped right into the service side of the cloud with an impressive list of offerings that should cause every other provider on the planet to take notice. Not only are PaaS and IaaS on the table, but such diverse offerings as hosted collaboration, virtual mobile Internet, energy management and cloud-based virtual desktops, all of which can easily be tweaked to suit target markets and key vertical industries.

Of course, it’s easy to view the Global Intercloud as a bold initiative designed to usher in an entirely new era of enterprise dominance for Cisco. But it is also readily apparent that the company had no choice but to make this kind of move. Software defined infrastructure based on white box hardware poses a direct threat to Cisco’s bread and butter, so the only way to manage the changing tide is to broaden the business model. Unfortunately, as Forbe’s Ben Kepes points out, cloud services are not nearly as profitable as traditional infrastructure, so the venture will need to attain extremely high volume in order to justify a $1 billion investment.

One thing that many people, perhaps even at Cisco, have overlooked, however, is the affect this will have on the company culturally. For many years, Cisco was the dominant player in enterprise networking. In the services market, it is a pipsqueak compared to Amazon and Google. Changing the corporate mindset from comfortable champion to hungry challenger is not as easy as launching a new business initiative. It’s kind of like trying to score touchdowns with your defense.

It will be interesting to see how well Cisco weathers this transition.

Photo courtesy of Shutterstock.

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