In a bid to transition its business towards selling more cloud-based software Cisco is ramping up investment in cloud services, pouring up to $1bn into products and services in the sector over the next two years according to the Wall Street Journal. The networking giant said it will spend the money building its own datacentres to host cloud services.
“Everybody is realizing the cloud can be a vehicle for achieving better economics (and) lower cost,” Rob Lloyd, Cisco’s president of development and sales told the WSJ.
Cisco could not be immediately reached for comment, but the company said the announcement will be discussed in more depth with customers at a news conference. The news arrives barely a week after Cisco announced its first partnership with a service provider, Telstra, that will see the Australian telco deploy the Cisco Cloud Services platform within its own datacentres. Cisco seems to be following in the path of other predominately hardware-focused companies that have shifted their emphasis on developing and deploying cloud-based services (i.e. IBM), particularly in order to fight declining revenues and flat growth. In November 2013 it acquired start up datacentre and cloud solutions provider Insieme Networks for a total pay-out of up to $863m, which gave the company a big boost in its infrastructure management capabilities. The company, which predominately sells networking hardware, saw revenues declined 3.1 per cent year on year in Q2 this year and 12 per cent in Q1, and is predicting even steeper sales declines in the current quarter. In a Q2 call with analysts Cisco’s chairman and chief executive officer John Chambers said most of that revenue loss was contained to emerging markets, where he said customers were holding off large infrastructure upgrades.
“While this economic trend remains out of our control, we have put in place important programs and efforts designed to capture growth and position Cisco to capture share even if these markets remain challenged,” he said. “We don’t get to decide whether or not we will emerge as the number one IT company. Our customers do. What we do get to decide is how we continue to deliver the value to our customers to retain the market leading position. This will be done by selling business outcomes enabled by architectures.”
Source: Business Cloud News