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

We asked senior veep Nick Earle what it means

If we don't help our partners, 'their financial model is going to collapse'

Earle argues that the strategy should deliver more revenue potential for partners: “What we need to do is find a way that cloud becomes an enabler of value, adding differentiation and profitability for the channel.”

Bonfire. Pic: DiAnn L'Roy, Flickr

Bonfire: Cisco doesn't want this to happen to its channel partners

Some partners will still concentrate on their competencies – and for some that is, and always will be, simply shifting hardware. Yet, Earle argues, the market place aspect of Intercloud will enable them to access services, products and the like offered by others, and vice versa.

He adds: “I think it is fundamentally important to have profitability, especially given the likely shakeout of the cloud market that’s coming due to the financial pressures we see.”

“End users will buy services because they know they’re secure and compliant, resellers will sell other people’s services because they don’t have vertical expertise.”

“Intercloud is actually a fundamental enabler of future channel profitability, because if we don’t find a way for our channel partners to make money out of cloud, then their financial model is going to collapse.”

The technology should allow this, but who operates the market? Why, Cisco, of course.

“The intent is we operate the market place on Intercloud and we will additionally have a ‘curated experience.” Aggregators - distributors and the like, resellers - will operate their own sub market places.

“As in any exchange, there’s different things, different exchanges, and they link together into a bigger exchange. So Cisco’s going to enable the big exchange. We haven’t announced any pricing or whatever. We’re just building it right now.”

“So yes, we see a world of many clouds, and a world of many market places but they’re all connected.”

If there’s a familiar ring to that, it may be that some of the Openstack promise/hype has lodged permanently in your brain. That could be secure flipping of workloads between private, hybrid, public and public clouds. Or it could be the sound of large vendors with a large stake in the status quo promising a new ecosystem model in the face of overwhelming competition from AWS, Google and Azure.

Or it could be the nagging suspicion that the cut-throat competition between the big three cloud players poses a threat to everyone in the market - including the big three.

At the conference where we spoke to Earle, Canalys chief Steve Brazier had called time on the big three public cloud vendors' capacity to continually slash their prices and build out their businesses. At the same time, the talk was of whether other providers, and partners, and vendors, could survive this three way death match/land grab.

Earle was loathe to comment directly on the economic principles behind AGA’s slugfest, and any comparisons with earlier “land grab” eras, for example 1999. He doesn’t really need to though. He was working in Silicon Valley at the time, and saw the dot com hype and eventual bust up at close quarters.

“Our view is that regardless of whether companies can attract funding, at the end of the day, a partner ecosystem is fundamental to success and you have to show a way in which partners can make money.”

“So what we’re doing is enabling everybody to get together to share the investment and to trade together.”

“Eventually, the basic laws of economics and finance win.”

“I think the history of the IT industry over 30 years has shown several cases where there was a phase two because two people strangled each other to death in their race to be the leader in phase one. It’s starting to look like that.”

If Intercloud plays out as planned, Cisco will have pulled off the incredible stunt of establishing a chokehold on phase one of the internet, and using its free hand to get a grip on phase two. ®

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