Cisco On The Intercloud Opportunity: 'We Have Created A Tornado'

Intercloud's Evolving Face

It's been almost four months since Cisco Systems shook up the market with its unveiling of Intercloud, a global cloud strategy that involves Cisco and its partners, hosting a range of public and private cloud services in data centers around the world.

Not all Cisco partners were clear on the Intercloud vision out of the gate. But Cisco partners and customers are buying into the Intercloud strategy more and more every day, according to Nick Earle, Cisco senior vice president of cloud sales and go-to-market. In fact, Earle told CRN, the last four months have fueled a "tornado" of interest in Cisco's hybrid cloud push.

Earle, in a recent interview with CRN, spelled out everything from how many Intercloud customer briefings Cisco has held to why Intercloud will never be the next Rackspace or Amazon Web Services. Take a look.

Talk about partner and customer traction with Intercloud so far.

"It's interesting. We have a bit of joke around here [at Cisco] that, when people say they are going away on holiday for a couple weeks, we say, 'Well, when you come back there will be a new Intercloud.'

…It's really starting to morph and change as more and more people got attracted to it. Let me explain what I mean by that. We started off by really saying that there are going to be 12 big service providers who are going to provide sort of the inner ring of Intercloud, and we announced the first one with Telstra. In fact, that's still the case. That hasn't changed. But what has changed is that we are now announcing a whole [bunch] of very different types of partners, from big Gold resellers to system integrators… to ISVs.

…Everybody wants to talk about Intercloud. We are probably doing 25 to 30 customer briefings a day -- literally a day -- around the world right now. Workshops, technical evaluations… as [Cisco's President of Development and Sales] Rob Lloyd likes to say, we have created a tornado."

How many Intercloud hosting partners do you have right now?

"In terms of major service providers, right now it’s the announcements we have made, so we have Telstra and Dimension Data.

The announcement with Dimension Data is two types of services. One is a public cloud capability bundled inside a Cisco SKU, so Cisco IaaS. The second one is Dimension Data white-labeling Intercloud pods to other service providers to bring more Intercloud-enabled partners on board as a white-label service.

You will see more service providers announced in the next wave of announcements, but we aren’t ready to release that yet."

Talk about the relationship between Cisco ACI and Intercloud.

"We bet that policy management across hybrid [cloud] would need to be done at the infrastructure level, not just at the software level. What I mean by that is if you take SDN, there are a lot of people -- VMware being a good example -- who are saying 'You know what? All this SDN is just going to be extracted up to the software layer and the hardware is not important.'

The second piece of enabling technology that has proved to be a winner here [in addition to the Intercloud fabric] is APIC [Cisco's Application Policy Infrastructure Controller], because what the APIC controller allows you to have is automated network and security policy across the hybrid cloud. So, for example, you can set a security policy that is event-driven and [says] 'if I get attacked, then implement this security policy, with regard to these workloads.' So then that security policy gets implemented not only behind your firewall, but across all of your public cloud providers, if they are Intercloud-enabled."

So are Intercloud hosting partners going to deploy Cisco ACI in their data centers?

"Yes, absolutely.

So, they have the Intercloud fabric code -- we have done code drops for Intercloud fabric -- but because the APIC is still not in general release, they are in the process of embedding that into their architectures."

Are Telstra and Dimension Data live with Intercloud customers?

"Both of them are live in terms of customers. Telstra, with the Openstack [Intercloud] node we have installed inside Telstra's data center, Telstra is now live with their first customers on Cisco Intercoud in Australia, running on the Openstack pod, if you like.

Dimension Data is already live, because Dimension Data had a pretty large cloud business already. They are already live on UCS, and they will be moving to Openstack… and they are incorporating Intercloud fabric and APIC into their architecture as we speak."

Why use hosting partners rather than host Intercloud in Cisco's own data centers?

"It still fascinates me that most cloud companies don’t believe the channel will be relevant in this world. We have held this belief, clearly, for 30 years -- the belief that it is relevant -- but most companies are building out data centers as fast as they can and actually selling the bulk of their services direct from the vendor.

Now the problem with that is two-fold. One is that it's expensive as hell. You have seen companies like Rackspace raise the flag that they need funding -- it's really hard to find the capital to keep on building out data centers for cloud. You need the capital upfront but you don’t collect the revenue until later on, so it’s a capital issue.

…If you combine this with the issues around data sovereignty, it's not just about where your physical data center is located, but, in many countries, the cloud service has to be operated by a company that is headquartered in that company. …So, we bet on data sovereignty, by leveraging our channel model so we could actually cover more countries than anybody else, and solve the financial problem by leveraging the investment of the entire ecosystem. That absolutely is the right bet."

You've said Intercloud is not a "me-too" Amazon Web Services strategy. What's the big difference between the two?

"We bet that there would be a backlash against public cloud vendor lock-in. We know that public cloud got off to a very fast start with, obviously, the poster child AWS and that's great. But the fact is, that's a proprietary lock-in.

…What we actually found is that, obviously, people wanted choice. So we bet that the model would not be public and it would be hybrid. And as simple as that sounds, the public cloud people are betting that there will be no hardware. [They are betting] that it's the end of hardware and that the CIO will not be a decision-maker because it will be line of business choosing and, therefore, IT is dead. Long live the cloud. We fundamentally disagree. We think it's going to be hybrid. And not only hybrid, but hybrid in a way where you have complete choice over cloud and not get locked in by any technology. It has to be open."

Talk about Cisco's pricing model for Intercloud.

"Our strategy is not to follow AWS on the race to zero. If you look at what they are doing, it's clearly a line grab and they are cutting prices and strategically losing money. Cisco does not believe in strategically losing money.

History shows that market courses eventually kick in and I would argue that we are starting to see that now with people like Rackspace asking for money. I think a lot of the public cloud plays that have been rewarded by the stock market -- financially, the wheels on those cars are shaking because this is a really expensive game to keep on building data centers and to keep on dropping prices. It's not the strategy we believe in and it's not a strategy that deliver partners profitability and partner sustainability either."

So will it be difficult to compete with Amazon on price?

"You've got to have a strategy that allows you to have a premium in a way that offers value for customers. …If you take Dimension Data, they are already in the market with IaaS and they are competitive to AWS. They are within 10, 20, 30 percent or in some cases at parity with AWS. But they are not 2x or 3x more expensive.

But if you look at what you are getting with [Intercloud], you are getting, of course, security. You are getting compliance. You are getting the guarantee. You are getting the SLA. You are not getting the problems that come with public cloud. So you can charge for that and people will pay for security and compliance. People lose their jobs when data gets hacked or goes missing.

…So will we be competitive? Absolutely. But ACI and dynamic programmability of the network allows us to have differentiated and higher-value services."

Will Cisco Powered cloud partners have a play in InterCloud?

"We have about 100 Cisco Powered partners. We expect all of them to be Intercloud-enabeld over the next year. Intercloud-enabled, at the very least, means you need to have the Intercloud fabric. However, the advantages of the policy controller, APIC, are significant, because the APIC allows your end users to have a security policy that, in this case, extends into your own Cisco Powered cloud."

How would you respond those who say Intercloud and ACI are not 'open' technologies?

"If you take ACI, ACI works with virtualized environments and any hypervisor. It works with containers, so it will work with a container approach like Google Kubernetes, and third, it will work with bare metal workloads. It's built on complete choice.

So that’s the ACI piece. When you look at the Intercloud fabric piece, whether or not you run it on containers or virtualization or bare metal, you still want the choice of open, highly secure portability of workloads across public and private cloud. So Intercloud fabric, independent of what's below it… enables you to have open, highly secure portability of workloads.

So I think that that's pretty open. If you then combine that with opening up the APIs, that a very open approach."

What's next for Cisco with its Intercloud strategy?

"The next stage will be the catalog. Anyone who is Intercloud-enabled will be able to connect to a catalog, put services into the catalog and sell other people's services off of the catalog. So where we are right now is building the Intercloud and then stage two will be monetizing the Intercloud.

… This catalog will be behind the firewall and run by enterprises. It's software, and the catalog will look different for every customer and every user because it will be personalized based on their choice of services and the rules they have put into their Intercloud fabric and APIC policy controller."

Talk about the application ecosystem Cisco sees forming around Intercloud.

"The Intercloud fabric is actually a set of APIs. And if you write APIs it means you can move the workloads. In the future, and we have been public about this, we will open up a wider set of APIs to allow software developers to create new applications. We will bring in the whole ISV community to create new applications that will be able to access the capabilities such as the Intercloud, such as the Intercloud fabric and our APIC controller.

What we talked about when we launched Intercloud is, in the long-term, it being the enablement platform for the Internet of Everything. In order for it to be the enablement platform for the Internet of Everything, we need a software development platform approach and we need to attract developers to develop on top of Intercloud, which means we need to open up the APIs and we need to open up the SDKs.

In fact, we have announced -- and it didn’t get much publicity -- that we have taken the steps to do that with the release of a technology called the services exchange platform."

How far along is Cisco in its creation of a new, dedicated cloud unit?

"The organization is complete. Intercloud is open for business. All the resources have been transferred. The next big thing is we have our worldwide sales event -- GSX Live -- at the MGM Grand in Vegas in August. I am keynoting on day one in front of 20,000 people on Intercloud. So, [Intercloud] is on our front, main stage, literally, and front and center in our strategy.

The next step is to empower our 20,000-strong sales force with the messages around Intercloud's value proposition so they can go out and Intercloud-enable every customer and every partner."