Cisco Cloud Services emerge: Let the 'coopetition' begin

With Cisco Cloud Services, the networking giant is transforming from hardware vendor to service provider and will sometimes compete with its partners.

Cisco will spend $1 billion over the next two years to build a vast cloud services business that relies on SDN and OpenStack to interconnect a federation of private and public clouds across the globe.

With Cisco Cloud Services, announced at the Cisco Partner Summit this week, the company will build an "Intercloud" that links together its own data centers with private and public resources from channel partners, cloud providers, telcos and customers. Together, Cisco and its partners will offer a wide range of cloud-based enterprise IT services, including Platform as a Service (PaaS).

Cisco Cloud Services expands on the old Cisco Powered program, which offered validated data center architectures to help partners build their own clouds. In the past, Cisco has said it would avoid competition with partners by not selling its own cloud services. However, the Cisco Cloud Services model appears to pit Cisco directly against massive cloud providers like Microsoft Azure, Google Cloud and Amazon, and potentially some telco customers.

Cisco executives said these providers are potential partners, not competitors. With Cisco Cloud, customers can integrate their own data center resources with those from Azure, for example, and more from a telco.

"Nobody can scale and do this alone or has the host power or the legal framework to satisfy data compliance issues," said Fabio Gori, director of cloud marketing at Cisco. "We've announced that we have native support of Amazon and Azure, and we can interconnect with those domains."

Analyst Lee Doyle of Doyle Research described the future relationship between Cisco and cloud providers and telcos as a "coopetition." Companies like Amazon, which are customers of Cisco, will have competing services. Meanwhile, many telcos that buy Cisco's equipment will sell their own cloud services alongside Cisco's. Cisco is essentially forcing its channel partners to evolve into selling IT services and to move away from "just selling boxes for the lowest margin," Doyle said.

"It's competitive in some areas, and it's coopetition in others," Doyle said.

For telcos, Cisco Cloud Services will offer tier-one and tier-two service providers a global infrastructure they wouldn't otherwise have the resources to build, said Ray Mota, founder of ACG Research. Service providers now have the ability to place their own branding on what Cisco's Intercloud has to offer.

With Cisco Cloud Services, compute, storage, Network as a Service

As Cisco and its partners build this federation of data centers, Cisco will make key pieces of its networking infrastructure and portfolio available as cloud-based applications.

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For the enterprise, the most notable of these offerings will be integrated compute, storage and networking as a dynamic service. After all, if customers can buy this infrastructure in the cloud, they won't have to buy so much on-premises networking equipment. Nevertheless, this is an unavoidable transformation for Cisco, Doyle said.

"Given an environment where HP, IBM, Google and Microsoft have this offering, it's a rational business decision," Doyle said. But the transition to the cloud won't be total and it won't be quick. Cisco is striving to enable a hybrid scenario that other cloud providers can't always manage.

Beyond PaaS, Cisco Cloud Services will provide cloud-based collaboration tools such as WebEx, the Scansafe managed threat defense service, remote infrastructure management using Meraki equipment, and Virtual Desktop as a Service. In its ongoing push into the buildings and energy management, Cisco will also make EnergyWise available as a cloud service.

Ultimately, though, Cisco said its new Cloud Services will serve as the underpinnings for the Internet of Things -- or the set of semi-private networks that will support machine-to-machine communications as everything from building management systems to cars become connected.

OpenStack and Cisco SDN in action

Until recently, interconnecting clouds for enterprise resources was a huge challenge because there wasn't a solid way for enterprise customers to stretch virtual networks, workloads and accompanying network and security policy across domains and disparate data center networks. It was also difficult to extend a single orchestration strategy across these environments.

Gori said Cisco will address those issues with a combination of new cloud fabric technology, Application Centric Infrastructure (ACI), and onePK SDN technologies, as well as the use of OpenStack orchestration. Gori compared OpenStack to the IP protocol -- saying it's a technology that will eventually become universal and work across all systems.

Cisco was short on deep technical detail regarding the infrastructure behind the Intercloud, saying it would release more information at Cisco Live this spring. But basically workloads will be abstracted and placed into "containers" or "drivers" in the cloud. The host cloud opens application programming interfaces that allow users to develop network routing, access and security policy. At that point, Cisco's fabric extends virtual networks between virtual machines (VMs) in the same or disparate data centers, essentially connecting abstractions of resources in multiple cloud provider and customer data centers. Each workload maintains its own policy, regardless of where it travels on the network.

"You can you do Layer 2 and Layer 3 services directly into Amazon and Azure," Gori said. Cisco technology can also "translate from one kind of hypervisor to another one," he added, noting that VMware, Microsoft, Citrix and KVM are all supported.

Cisco ACI will be used to apply centralized control and programmability for application optimization and security policy provisioning inside data centers. Meanwhile, the Intercloud fabric is actually part of the Cisco onePK SDN strategy. That is the technology that will enable the abstraction layer across Cisco network hardware.

Cisco has already begun the build out of its cloud services with Australian telecom provider Telstra.

"What we are doing with Telstra is building a Cisco design with OpenStack and ACI – it's our blueprint into the Telstra environment and we are also operating it. By doing this, Telstra can focus on marketing and selling," Gori said.

Gori pointed to the Telstra partnership as proof that Cisco is not competing with its telco and cloud provider customers.

"We are giving them a means to accelerate speed of deployment," Gori said. "They are stitching together unique services and assets and they can broker and integrate additional services."

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