Report: Cisco To Invest $1bn In Enterprise Cloud

Cisco is to invest $1bn (£63m) into enterprise cloud services over the next two years, as it seeks to diversify away from networking hardware, according to a Wall Street Journal report. Cisco’s investment will be concentrated on constructing data centres for the service, called Cisco Cloud Services, which will also reportedly use partners’ infrastructure.

“Everybody is realising the cloud can be a vehicle for achieving better economics [and] lower cost,” Cisco president of development and sales Rob Lloyd told the Journal. Cisco is to discuss the service with customers at a conference on Monday, according to the report.

Enterprise focus

The company said it is not looking to go head-to-head with Amazon, which currently dominates the provision of cloud infrastructure, but rather will focus on large enterprises and government agencies that want cloud services to complement their in-house IT. Cisco will target tasks such as customer order processing and virtualised employee desktops that can be accessed from anywhere.

Cisco plans to fine-tune its infrastructure for enterprise software from SAP, Microsoft and VMware, according to the report.

Cisco said it also plans to resell its services through telecommunications companies that can package them with other Internet-based services. Canada’s AllStream is said to have signed up as a partner, while Australian telecoms provider Telstra said it would work with Cisco in building cloud infrastructure for the service in Australia.

“Our customers will now have the choice of cloud infrastructure from global leaders, allowing them to select the cloud service to meet their requirements and scale network and cloud resources to deliver service agility, security and performance,” stated Erez Yarkoni, Telstra’s executive director for cloud services.

Revenue slump

Cisco’s revenues have been hit by a slowdown in enterprise equipment spending due to economic uncertainty and a broad shift to cloud services. The company’s revenues saw a 3.1 percent decline during the six months ending 25 January, and Cisco said it expects the decline to accelerate in the current quarter.

The company is also seeing increasing competition from lower-cost network equipment providers such as China’s Huawei.

Last month at the Mobile World Congress 2014, Cisco chief executive John Chambers (pictured) predicted a year of flux and “musical chairs” in the networking field.

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