Cisco Recruits Partners for ‘World’s Largest’ Cloud

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Cisco Systems Inc. (NASDAQ:CSCO) is following in rival International Business Machines’ (NYSE:IBM) footsteps and investing more than $1 billion in its cloud computing offerings over the course of the next two years. IBM announced that it would make a similarly large investment in the technology earlier this year and purchased cloud computing company Cloudant Inc. last month. Both companies still lag behind industry pioneer Amazon.com Inc.’s (NASDAQ:AMZN) Amazon Web Services.

Like IBM, Cisco is turning to the technology as hardware sales have plummeted and companies increasingly prefer to invest in cloud-based servers rather than maintaining their own hardware. Cisco’s past few quarterly results have shown the drag this shift has had on a company that is primarily known for its hardware.

Cisco says the $1 billion investment will go toward building more data centers that companies can access to do tasks like store information or allow employees to access their work computers from home. Companies that Cisco says it will be collaborating with on its Cisco Cloud Services project include the Australian Telstra, Canadian telecom company Allstream, European cloud company Canopy, and tech distributor Ingram Micro Inc.

Cisco said its cloud offerings will focus on IT and increasing its Internet of Things investment. The Internet of Things is a burgeoning technology movement that seeks to connect everyday items such as appliances to the Web via cloud technology. Cisco refers to the movement as the “Internet of Everything.” The company reports that it’s partnering with cloud providers around the world to create “the world’s largest global Intercloud,” which will focus on the Internet of Everything project. Per Cisco, the Internet of Everything will represent a “$19 trillion economic opportunity” in the coming decade.

“The Cisco global Intercloud is being architected for the Internet of Everything, with a distributed network and security architecture designed for high-value application workloads, real-time analytics, ‘near infinite’ scalability and full compliance with local data sovereignty laws. The first-of-its-kind open Intercloud, which will feature APIs for rapid application development, will deliver a new enterprise-class portfolio of cloud IT services for businesses, service providers and resellers,” the company said in a press release.

“Customers, providers and channel partners alike are turning to Cisco to create open and highly secure hybrid cloud environments, and they want to rapidly deploy valuable enterprise-class cloud experiences for key customers — all while mitigating the risk of capital investment,” said Robert Lloyd, Cisco’s president of development and sales. “The timing is right for Cisco and its partners to invest in a groundbreaking, application-centric global Intercloud to provide broader reach and faster time to market.”

Cisco reported fourth-quarter earnings last month that beat expectations but still didn’t impress investors, since the bar wasn’t set very high to begin with. Headwinds caused by a drop in hardware sales as well as falling sales in emerging markets have caused analysts to forecast a 4 percent drop in revenue for 2014. Cisco itself has revised its sales forecast downward for the next three to five years.

The company is pouring its resources into the cloud and the Internet of Everything in the hopes that getting in on these technology movements can help turn business around.

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