Cisco Set To Shake Up Market With Aggressive Pricing On Intercloud

Cisco is set to unveil a price-aggressive strategy for its ambitious Intercloud software.

Cisco has yet to finalize pricing for the enterprise edition of the software, but is eyeing a potential price of about $500 per port as an annual subscription license for the enterprise-class license of the Intercloud software and only $250 per port per year for the license from Cisco powered service provider networks, said Bob Gault, vice president of cloud and managed services partner organization for Cisco.

"We are not going to get rich selling these licenses to an enterprise customer," said Gault Monday morning in a presentation before about 118 IT executives at the 18th annual cloud summit hosted by solution provider hybrid cloud powerhouse GreenPages Technology Solutions at the Sheraton Harborside in Portsmouth, N.H. "It is strategically important to us to embrace hybrid cloud."

Gault stressed that Cisco is still finalizing the pricing and it could change. "It is directionally correct," he said of the estimated price tag, which has not been formally announced by Cisco.

Even without final pricing, Gault said the new Cisco Intercloud fabric software for enterprises is already available for customers to implement to assure all the benefits of Intercloud including data sovereignty and application portability in hybrid cloud environments. "It is as simple as taking the (Intercloud enterprise) software and embedding it into the private cloud as a virtual machine," he said.

Cisco aims to leverage its powerful fast-selling Unified Compute System server and its network management platform so private and public cloud workloads can be managed under UCS Director under a "single pane of glass," said Gault.

Gault urged both partners and customers to start testing and deploying the Intercloud fabric software. "It's a software play," he said. "A lot of our partners are not familiar with software. What I am encouraging our partners to do is get the API (application programming interface), get the software, test it, pilot it, kick the tires on it, so that they understand it."

GreenPages LogicsOne CTO Chris Ward, who has helped architect Cisco's successful cloud management-as-a-service platform, said one big hurdle for Cisco is how partners like GreenPages are going to make money selling Cisco Intercloud.

"We have to dig into this," he said. "If it is $500 to the user what is our cost? We are still figuring out how we make money on it. Nobody is going to make any money just reselling the stuff unless you are doing extra management and services work on top of it."

Ward said he is anxious to test the Intercloud software which has up until now has been more talk than reality. "2015 is going to be the big launch for all this," he said. "Cisco is talking a good game and it is obvious they are going after VMware hard. Everything is on [OpenStack based-] KVM as the hypervisor. Everything is on OpenStack for automation. There is no VMware in there at all."

Ward said he sees the Cisco Intercloud offensive as a cloud "land grab" of sorts aimed at getting Cisco customers to buy into the Cisco cloud story even though Cisco "may not have a true product yet. Cisco is seeding [the market]."

Ward said he sees managed service,s which has been a fast growing part of GreenPages' business, as the key to success with Intercloud. That could be an issue given that Cisco is aggressively pushing an applications catalogue with partners like SunGuard, which is providing a disaster recovery service and others.

"The question is who does the [cloud] management?" said Ward.

NEXT: The New Cisco Intercloud Offensive

Besides the soon-to-be-released price on the Intercloud software, Gault pointed to new services from Cisco Intercloud partners that are being brought quickly to market.

For example, he said, Cisco is also set to make available to Cisco solution providers on August 15 a white-label version of solution provider behemoth Dimension Data's Intercloud service through the Cisco partner network.

Cisco partners buying the Dimension Data Cisco-powered service will still "invoice the end user customer for the hardware and software" including the cloud infrastructure-as-a-service, said Gault "It is a Cisco brand," he said. "If you want to go into the website it is a Cisco website. It looks like Cisco. It feels like Cisco, but behind the scenes we have got a partner providing the level two and level three support."

The new Dimension Data offering comes with the solution provider recently being named a "niche player" in market researcher Gartner's Magic Quadrant for Cloud Enabled Managed Hosting in North America.

The Cisco-powered cloud service from Australia-based Telstra, meanwhile, is set to be available in November, said Gault. "You will see more announcements from us over the next 30 to 45 days," he promised.

Cisco aims to limit the partners initially offering the Intercloud software through its authorized technology provider program. "We are going to limit who can buy this from a partner perspective because we want to make sure that our partners can provide that pre and post sales experience that you need moving through this Intercloud fabric," he said.

The new Cisco Intercloud offensive represents a watershed move to assure that "everything that comes out of Cisco over time will be API (Application Programming Interface) based," said Gault. "It no longer will be just CLI (Command Line Interface for Cisco's IOS networking software) based. It will be API based. So everything will be cloudized over time."

Cisco has even hired hot talent from Amazon Web Services to help power its Intercloud software catalogue, said Gault. He said new 500 strong cloud division is filled with cloud and managed service experts who are driving the revolutionary Intercloud transformation in Cisco.

"Everything we are doing is really focused on cloud," he said calling the Intercloud effort an "absolute priority" that is being backed up with $1 billion investment by Cisco. "We need to move fast and we are moving fast," said Gault.