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Could Cisco's Intercloud give it another chokehold on the Internet?

We asked senior veep Nick Earle what it means

Interview When companies around the world are still running $40bn worth of your networking kit that is officially classified as past end-of-life, you might have to learn a few new tricks to keep the revenue coming in. Or even better, dream up a whole new strategy.

So, let’s think this through. We’ll probably need a few buzzwords. Cloud is an essential. OK, what else? Software defined? That’ll work. And ecosystem. That’ll tick a lot of boxes with the partners. We’re still having partners, right?

And just for the benefit of Wall Street, we need to show we’re not just about commodity hardware, that’s so last century. Instead, let’s make sure we’re making a big noise about software and services. You’ve gotta love annuities, right.

That is the problem facing Cisco, and it has taken the time honoured route of recasting itself as a software and services company, while insisting it will keep faith with its existing partners.

Central to this strategy is Intercloud, which the first time you read about it is such all encompassing strategy as to be almost meaningless. Crudely put, Intercloud will provide a fabric to underpin moving workloads between data centres, while promising CIOs and partners that security and policy restrictions will not be compromised.

That seems to be Intercloud with a capital I, and Cisco has actual products to back this. But there also appears to be a version with a lower case I, encompassing a whole philosophy of connecting up different clouds, and selling and shifting services between them.

We caught up with Cisco’s svp for cloud and managed services Nick Earle at the Canalys Channel Forum to see if we could wrap any more flesh on the bones so far.

Cisco’s most recent results showed the firm just scraping in ahead of expectations on revenue, but its Asian business is still underperforming. So, a bit of top line growth wouldn’t go amiss. But Cisco is in something of a bind here. Earle says the company has $200bn of installed base equipment. “The reason I know that is I ran support services and there’s a contract for every box... that’s still active, the lights are blinking.”

Put another way, that’s about seven years of shipped product, and, adds Earle, $35bn to $40bn of it is “end of still works.” That’s perhaps not a surprise when you consider the pivotal role Cisco played in the internet explosion of the 1990s, a role that was consolidated as it went on to... er, consolidate the industry.

It’s not a surprise when Earle squarely pitches Cisco’s aim with Intercloud as analogous to Cisco’s aim in the 1990s.

“We are really trying to copy the play we made 25 years ago, around connecting [the discrete networks]. If we connect, an ecosystem grows up. But we’re not mandating.”

That could be seen two ways - providing a common technology infrastructure that underpins growth for all, or grasping for a chokehold that will secure a revenue stream for years to come.

“By offering dynamically programmable infrastructure, what we are doing is offering the ability to have policy driven from the application down – the Holy Grail,” Earle continues.

“In order to do that you have to some components of the network – not all – to be the latest version of our products.”

This can simply mean the APIC controller and its 9000 switch appearing somewhere in the mix, enabling the fabled software-defined network.

“That’s massively important. The 9000 allows the underlying infrastructure to be programmable.”

And crucially, this still allows resellers and the like to sell “what’s on the truck”. Why is this crucial? Because, as any channel player knows, moving to annuities or service type revenue is all very well, but what do you do for cash flow in the mean time.

Put another way: “Right now it’s infrastructure monetisation.”

This is not the sort of instant obsoleting of product that characterised the Wintel alliance in its heyday, Earle points out – it is hard to imagine telcos and giant enterprises sucking up the overnight retirement of that $40bn of end of life kit, no-matter how much Cisco’s sales force would like them to.

So, Cisco helps partners keep their product revenue plates spinning. But what about the software and services part of the equation?

After all, Earle says, “We have accepted we need a much greater percentage of our business that’s software and services.”

Words that will always put a chill into the heart of a firm’s existing partners.

“Going forward, it’ll be services monetisation through the catalogue, but we’ve not released that. There’ll be a catalogue called the Intercloud Marketplace. The catalogue will mean that anyone who’s connected to the cloud, enterprise user or any partner, can buy or sell off the marketplace.”

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