Cisco will abandon its InterCloud cloud-computing offering on March 31 and will move any InterCloud workloads to other, unnamed cloud providers, including “in some cases, public cloud,” VentureBeat quoted Cisco as saying.
Cisco’s pull-back from the cloud scene marks the latest example of smaller participants — many of them hardware-makers — bailing in the face of huge growth by Amazon Web Services and Microsoft Azure, and to some extent by Google Cloud, IBM and other, smaller public-cloud services.
Hewlett-Packard in 2015 abandoned its efforts to be a public-cloud company. Then, Hewlett-Packard Enterprises essentially shut down its much-ballyhooed Helion cloud offering earlier this year. VMware still offers its vCloud Air hybrid-cloud service, though it has agreed to partner with AWS, which it once viewed as its arch-rival for cloud workloads.
“We do not expect any material customer issues as a result of this transition,” Cisco said in response to a request for comment. “For the last several months, we have been evolving our cloud strategy and our service provider partners are aware of this.”
Cisco launched InterCloud almost exactly two years ago. It anticipated spending $1 billion over the next two years building the offering, which it called “a network of clouds” and “a way to lower the total cost of cloud services ownership and pave the way for interoperable and highly secure public, private and hybrid clouds.” It was to be, Cisco said in March 2014, “the world’s largest global intercloud” and yet also “the first of its kind, delivering a new enterprise-class portfolio of cloud IT services.”
Cisco said it planned to build the product through partners, including Australian service provider Telstra; Canadian business communications provider Allstream; European cloud company Canopy; cloud services aggregator Ingram Micro Inc. and others. InterCloud would include platform and infrastructure as a service and Cisco’s collaboration, security and network management, and would be “architected for the Internet of Everything.”
But successfully competing in the public-cloud market requires resources few companies can afford, and the private-cloud market hasn’t really taken off as many (especially hardware vendors) predicted and hoped it would. And so far, no one has achieved much success at tying them all together, or has apparently even found much demand for such a thing, possibly because the big public-cloud companies’ offerings are already so vast in themselves and because those companies seem to be successfully addressing the need for joint public-cloud and in-house computing.
Cisco faced pressure to enter the cloud market because the long-time maker of the switches, routers and networking gear that are essentials in corporate data centers has suffered as cloud computing grows. A market analysis from Cisco itself this spring predicted that 83 percent of all data-center traffic will be based in the cloud. Of course, corporate data centers still exist, and will continue to do so, but they are fewer. And rather than using other manufacturers’ gear in their huge and numerous data centers, public-cloud services AWS and Azure are increasingly designing their own, using some off-the-shelf components. They are also virtualizing some gear, replicating hardware in software.
AWS’s share of the market for infrastructure and platform as a service as of June was over 30 percent, with year-over-year revenue growth of 53 percent, according to Synergy Research Group. Azure’s was over 10 percent, with revenue growth of 100 percent. IBM’s share was about 8 percent, Google Cloud’s was about 5 percent, and the remainder was collectively consumed by 12 or more companies.
The market appeared to shrug off the news. Cisco shares fell 15 cents, or 0.5 percent, in after-hours trading today. Shares of the company are up 16 percent in the past year.