Cisco Public Cloud Push Piques Partner Interest, But Questions Remain

While Cisco Systems partners this week largely embraced the tech giant's new global cloud strategy, some solution providers -- and especially those who have invested in their own Cisco cloud services businesses -- are left wondering where they'll fit in.

"For us, as a regional integrator, the opportunity is definitely there," said Leo Galletta, president and CEO of Converged Technology Group, a New York-based Cisco Gold partner, at Cisco's Global Partner Summit in Las Vegas this week. "But I think that there are other [partners] in this room that maybe have made big investments [in cloud] where this could be seen as a road to something that's competitive."

Cisco Monday said it's investing $1 billion into building out what it called a global InterCloud, or network of connected public, private and hybrid clouds. Cisco, San Jose, Calif., itself is building out a network of data centers to host cloud services including Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS), and also will host the services in partner-owned data centers that use Cisco gear.

[Related: 10 Reasons Cisco's Public Cloud Is Set To Shake Up The Market ]

Out of the gate, Cisco hosting partners include Telstra, Ingram Micro, Logicalis, European cloud company Canopy, Canadian service provider Allstream, and data center and IT solutions provider OnX Managed Services. Cisco said solution providers will be able to resell these services, under a white-label model, both from Cisco directly and its hosting partners.

Different Cisco solution providers are reacting differently to the news. While almost all agree that Cisco needed to make a bigger push toward cloud, those Cisco partners who have invested in their own branded or Cisco Powered clouds feel like the competition just got a whole lot tougher.

"Cisco keeps saying 'scale, scale, scale' -- that's what this is all about," said Mike Girouard, executive vice president of sales at TekLinks, a Birmingham, Ala.-based Cisco Gold partner that established its own cloud services business back in 2005. "So what makes me nervous is that we have three data centers. We offer hosted email, off-site backup, virtual desktop, hosted voice, all of that stuff and all on Cisco, EMC, VMware and Citrix technologies. But we are small. We cater to basically four states. So when Cisco announced this, I kind of see, if I'm not careful, the big boys winning."

These "big boys," Girouard said, are Ingram Micro and the other hosting partners that Cisco named this week which, because of their size and scale, can likely offer services such as IaaS at a more aggressive price point than smaller partners such as TekLinks.

"Right now, we are competing in an IaaS market where those bigger boys can scale. And that's what scares me," Girouard told CRN. "I don't want Cisco to leave us, who really believed in making this turn [toward cloud] six years ago, because we don't have the scale and they have a race to run."

Other Cisco partners who have invested in their own cloud services practices feel a similar level of concern.

"The question for us is, as a Cisco channel partner providing cloud today, we want to make sure this doesn't impact our business [negatively]," said Alistair Woolcock, country general manager of sales, USA at Calgary-based Cisco Gold partner Long View Systems. "We want it to open the door for accelerating our own investments. We were told it's going to be 18 months before it's ready for mainstream."

Girouard said TekLinks might consider partnering with ISVs to create more "verticalized" cloud solutions for markets such as health care or financial services as a way to differentiate its Cisco Powered cloud services from those offered by Ingram Micro and the other Cisco hosting partners.

"I think we can monetize on a lot of these changes, but I really need to understand where [Cisco] is going to focus so I can make some decisions," Girouard said. "But the fact that they are saying 'partners are first' -- and I do believe they are partner-centric -- I really think they are going to listen."

Chuck Robbins, senior vice president of Worldwide Field Operations at Cisco, said Cisco plans on doing just that.

"Most of the services that I think we are going to build will be complementary to what our partners have already invested in," Robbins told CRN. "In fact, we have begun to have detailed planning sessions with many of those partners to make sure we operate in a way that preserves their investments, however they look, and that whatever we decide to do doesn't create some competitive challenge."

NEXT: Partners Embrace Cisco White-Label Opportunity

For Cisco partners who haven't invested in hosting their own IaaS or other cloud offerings, they said the white-label and other services opportunities presented through Cisco's new cloud push will be huge.

"I think it's a great move on the part of Cisco," said Waheed Choudhry, president and COO of Nexus IS, a Valencia, Calif.-based Cisco Gold partner. "It helps to validate a marketplace, No. 1 and, No. 2, for a partner like us, who didn’t make an investment in specific cloud assets [but have] offers that are much more white-labeled through partnerships, this is a great extension of the partnership we have with Cisco."

Tim Hebert, CEO of Atrion Networking, a Warwick, R.I.-based Cisco Gold partner, said he expects new consulting opportunities around Cisco cloud.

"I think it's early now to tell how we'll be able to incorporate Cisco's new cloud services but I think we'll want to work with them on a consultant basis, helping customers understand how to move to the cloud," Hebert said. "Instead of building out a customer's data center to maximum capacity, I could see building it for average capacity and then moving peak workloads to the Cisco InterCloud. ... We're never going to build a data center [to host our own cloud services]. That's just not where we want to be."

Either way, most partners seem to agree that it was time for Cisco to stake a claim in the public cloud market, even if it faces some tough competition from the likes of Amazon Web Services or HP Enterprise public cloud.

"We're still excited for Cisco," said Girouard. "This puts them in middle of software, ISVs relationships and cloud providers, which is exactly where the market is going."

Riordan Maynard, CEO of Touchbase, a Denver-based Cisco Gold partner, said he thinks Cisco's InterCloud strategy looks "amazing."

"I've been asking [Cisco] for it for a long time," Maynard said. "Personally I think cloud is a big-brand game. To have access to capacity through a big brand, I think that's very valuable to partners."

Doug Woolley, group executive of technology at Business Connexion, a Johannesburg, South Africa-based Cisco Gold and HP partner, said it will be interesting to watch how the Cisco-HP cloud battle plays out.

"I think HP's gone through their pain and are lifting their head, whereas Cisco is in the throes of their pain and are trying to work their way out of it," Woolley said. "I'm not going to write [Cisco] off. They're at a crossroads. John Chambers is like a bull in a china shop, he'll push [his vision] through. ... They're the most dangerous player at this point in that they're a little more desperate."

JENNIFER FOLLETT contributed to this story.

PUBLISHED MARCH 27, 2014