Cisco's Top Cloud Exec: We're Not Following Amazon On 'The Race To Zero'

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Cisco Systems' top cloud executive wants to make one thing clear: Cisco is not, and has no ambition to be, the next Amazon Web Services.

"Our strategy is not to follow AWS on the race to zero," said Nick Earle, senior vice president of cloud sales and go-to-market at Cisco, in an interview with CRN. "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."

Cisco tapped Earle in March to lead its newly formed cloud sales and go-to-market organization, and he is one of the driving forces behind Cisco's Intercloud strategy for building out a global network of public and private clouds.

Related: Cisco Partners: Intercloud Strategy Still Fuzzy, But Peres Could Turn Things Around

Cisco unveiled Intercloud at its Global Partner Summit in March, and it represents the networking giant's formal entry -- and one it says was long-awaited by partners -- into the public cloud arena. The Intercloud model consists of a mix of cloud services that will be hosted within Cisco's own data centers and Cisco partner-owned data centers that are powered by its new Application Centric Infrastructure (ACI).

Earle declined to say how many data centers Cisco plans to use to host its own Intercloud services but said the bulk of the hosting -- nearly 95 percent of it -- will be done by partners.

Through Intercloud, Cisco will offer IaaS, SaaS and PaaS directly but also through its network of cloud hosting partners, which today consist of Australian service provider Telstra and systems integration giant Dimension Data.

More Intercloud hosting partners will be unveiled next month, said Earle. Telstra, meanwhile, is already live with some Intercloud services.

One of the biggest differences between Cisco's cloud strategy and those of competitors such as AWS or Rackspace, he said, is that Cisco won't engage in the race to the bottom in terms of pricing. The reason, he said, is that Cisco wants partners to make money.

"Will we be competitive? Yes, absolutely. But ACI and dynamic programmability of the network allows us to have differentiated and higher-value services," Earle said. "Our IaaS capabilities will be competitive to the market but … we are not trying to be the cheapest."

Pricing details for Intercloud services have not been finalized. Earle said they will be "competitive" but still yield rich margins for partners. 

Harry Zarek, CEO of Compugen, a Richmond Hill, Ontario-based Cisco partner and No. 56 on CRN's 2014 Solution Provider 500 list, said Compugen views Intercloud as a much greater, and more lucrative, opportunity for solution providers compared with AWS.

"Amazon has an incredibly small margin model [that is] more aligned to a distributor than a solution provider," Zarek wrote in an email to CRN, noting that Compugen had explored a partnership with AWS but ultimately walked away from the opportunity. "I expect [Cisco with] Intercloud will recognize that and motivate partners."

Skip Tappen, COO of NWN, a Waltham, Mass.-based Cisco partner and No. 81 on the 2014 Solution Provider 500, said NWN views Cisco Intercloud as one of the most channel-centric cloud models in the industry today.

"I do believe [Intercloud] continues to demonstrate Cisco's dedication to the channel and to partners. If you look at what a lot of the other players are doing out there, they are actually building out [a cloud] and then you potentially get a chance to resell it, but even your resale options are limited," Tappen said. "My impression is that Cisco is truly looking to enable the channel and to enable partners, as opposed to doing it themselves."

NEXT: Earle Says Intercloud Delivers 'Higher-Value' Services Than AWS

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