The Demise of Intercloud Services Provides an Opportunity for Cisco’s Cloud Strategy

C. Drake
C. Drake

Summary Bullets:

  • With the termination of its Intercloud Services, Cisco will now focus on helping enterprise customers build and manage their own hybrid environments.
  • Cisco stands to benefit from the closure of Intercloud, which provides it with an opportunity to streamline and redefine its cloud strategy.

The announcement by Cisco that it plans to terminate its Intercloud Services (CIS) public cloud on March 31, 2017 has been widely criticized as a failure of Cisco’s attempt to compete against hyper-scale public cloud providers and further evidence of the comparative weakness of public cloud offerings based on OpenStack open source technology. However, the decision by Cisco to put to bed an initiative which it launched in September 2014 can also be seen as a positive move by the vendor to realign its resources and refocus its cloud business, the latter having been historically criticized for being disjointed, lacking clarity and failing to deliver momentum.

Cisco first launched its billion-dollar Intercloud initiative in September 2014, partly in response to its partners which wanted the vendor to enter the public cloud market as an alternative to Amazon Web Services (AWS). The multi-tenant hosting platform comprising a federation of clouds was designed to enable workload portability between private and public cloud environments. However, recent months have seen a retreat by both Hewlett Packard Enterprise (HPE) and VMware from their respective public cloud businesses, and many have seen Cisco’s decision to terminate Intercloud as yet another example of a technology vendor’s failure to make a success of its public cloud initiative next to the growing popularity of AWS, Microsoft Azure and Google.

According to Cisco, the decision to terminate Intercloud was a strategic move that reflected the changing needs of its customers. Going forward, the vendor plans to focus on helping its enterprise customers build and manage their own hybrid environments. Indeed, the decision to terminate Intercloud can be seen as having positive implications for Cisco’s hybrid cloud infrastructure and hyper-converged solutions businesses, both of which will be a strong priority for the vendor in 2017. At Cisco Live! 2016, Cisco announced the launch of its CloudCenter solution, which is essentially a rebranding of the CliQr cloud orchestration platform Cisco acquired in April 2016. The platform helps customers manage the entire application lifecycle across hybrid IT environments and allows them to model, deploy and manage applications across bare metal, virtualized and container environments. The new solution is an important building block in the evolution of Cisco’s hybrid cloud strategy and has potential to help the company’s customers simplify and accelerate their own private, public and hybrid cloud deployments.

Cisco has presented CloudCenter alongside its Tetration Analytics and its Application Centric Infrastructure (ACI) offerings as a ‘complete solution’ for helping enterprise customers manage the entire lifecycle of their applications and workloads in a hybrid IT environment. This focus on helping customers manage their own hybrid environment dovetails nicely with Cisco’s focus on providing hyper-converged infrastructure (HCI) solutions. Cisco’s HCI offering, HyperFlex, is currently an OEM of SpringPath. However, the importance of HCI to Cisco’s long-term strategy means that the vendor will give HCI even more priority in 2017 and, through the likely acquisition of SpringPath, will make HyperFlex a fully owned solution.

Cisco’s immediate priority will be to transition existing Intercloud customers off the platform and over to an alternative public cloud. AWS, Azure and IBM could all benefit from this development. However, moving into 2017, Cisco also stands to benefit from the closure of Intercloud, which provides the vendor with an opportunity to streamline and redefine its cloud strategy and to refocus its enterprise solutions business on a clearer set of specialist objectives.

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