Cisco: $1bn cloud play is not a covert direct strategy

Networking titan to operate mixed go-to-market model, but partners back plan to build 'world's largest' cloud of clouds

Cisco is to invest $1bn in pursuit of becoming the world's leading hybrid cloud player, including the construction of "the world's largest intercloud". The vendor will be selling its enlarged Cisco Cloud Services portfolio directly, but has asserted that "the vast majority" of sales will still go through partners, and denies its cloud plans represent a "covert direct strategy".

The cloud of clouds will encompass private clouds built by both Cisco and its partners, Cisco Cloud Services, and public clouds - possibly including the likes of Amazon Web Services, Microsoft Azure, and Google. Partners to have already nailed their colours to the Cisco cloud mast include Logicalis and Ingram Micro.

Services will be offered under the Cisco brand - both direct and via a commodity resale model - as well as co-branded with partners and on a white-label basis. To offer services in a co-branded or white-label model, partners must be accredited under the Cisco Managed Services Programme.

Speaking at the vendor's Partner Summit in Las Vegas, Nick Earle, Cisco's vice president of cloud sales, compared the mixed go-to-market model to the vendor's creation four years ago of 500 "transformational accounts", which allowed top customers to choose whether they worked with Cisco, a partner, or both in unison.

"Since then the data shows that the vast majority of sales [to the transformational accounts] is still through partners," he explained. "We will take a similar approach [with Cloud Services], and we believe that the vast majority of sales will go through partners - this is not a covert direct strategy."

Partner praise
Chris Gabriel, chief technology officer at Gold partner Logicalis, gave his backing to Cisco's cloud play and claimed "I do not see it as any kind of threat", pointing out that Cisco has always been partner-friendly. He predicted that his firm will operate across all go-to-market models.

"We need to be really smart about borrowing capacity from Cisco, blending it with our own, and creating a seamless service for our customers," he said. "[There will be] a bit of integration, a bit of Cisco-branded services, and a bit of our own-brand services. I see no reason why we wouldn't be exploiting a little bit of all of those."

The Logicalis man forecast that the creation of an intercloud giving end users increased sight of different cloud models from different providers across the globe will lead to a degree of price standardisation. But Gabriel asserted that the profitability opportunity for channel partners is similar to that in the product world.

"It will force a little bit of price competition and price flattening, but that is not going to happen overnight," he added. "Instead of margin coming from systems integration, it will come from service integration."

Services offered in the Cisco Cloud Services portfolio will cover infrastructure- and platform-as-a-service, collaboration, security, network infrastructure management and other remote management services, virtual desktops, mobile internet, video tools, and energy management.

Rob Lloyd, Cisco president of development and sales, claimed that the headline $1bn (£606m) investment is "not enough" to establish the networking vendor as the leader in the hybrid cloud space, and stressed the importance of concurrent investments being made by partners.

"We have done very well in being recognised as a leader - if not the unequivocal leader - in private cloud," he said. "We are moving to become the number-one player in hybrid cloud. The conversation on the minds of our partners and end users is how do they leverage the value of public clouds and their [existing] private cloud infrastructure."