Cisco Expands Intercloud Architecture With Metacloud Acquisition

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Cisco (NASDAQ:CSCO) recently announced its intent to acquire private cloud provider Metacloud, in an effort to bolster its global Intercloud platform and architecture. Metacloud provides private cloud solutions to organisations with its OpenStack-as-a-service model, delivering ready-to-use private clouds in clients’ data centers. The deal is expected to close by the end of the ongoing quarter (Q1 FY2015) and upon completion of the acquisition, Metacloud’s employees will join Cisco’s Cloud Infrastructure and Managed Services business division. ((Acquisition of Private OpenStack Cloud Service Company Accelerates Cisco’s Intercloud Strategy, Cisco, September 17 2014))

Cisco’s Cloud Services architecture is also based on OpenStack open source software and is designed to help customers to easily and securely use data across both private and public clouds. The acquisition is likely to provide a boost to Cisco’s plans to build the world’s largest Intercloud, which is a secure network of globally distributed and remotely managed clouds capable of meeting growing customer needs, especially as part of the Internet of Everything (IoE).

Intercloud is part of the company’s Data Center division, which has witnessed rapid sales growth in the last couple of years. Divisional sales grew by about 60% year-over-year in FY2013 and over 27% in FY2014 on the back of solid expansion in the company’s Unified Computing System products as well as cloud offerings.

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We have a $27 price estimate for Cisco, which is slightly ahead of the current market price.

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Cisco’s Intercloud Strategy

Cisco announced its Intercloud strategy in March and has since made rapid strides in the domain. The company has already partnered with several firms such as Telestra, Canopy, Dimension Data, Sungard Availability Services, Johnson Controls, Wipro and, more recently, Red Hat to expand its infrastructure-as-a-service offerings and accelerate the IoE concept. Cisco’s Intercloud utilizes the company’s Application Centric Infrastructure (ACI) to improve application performance and security. ((Cisco is Moving Fast with our Partners to deliver on the Promise of an Intercloud, Cisco, May 20 2014)) [1]

The company stated in March that it expects to spend over $1 billion in the next two years to build and expand its cloud business. Its strategy of partnering with specialist organizations to expand its cloud capabilities is likely to bolster its goal of building the largest Intercloud in the world. The company estimates the Internet of Everything market to be worth $19 trillion in the next ten years, which is a key driving factor for the company’s plans to rapidly expand its cloud offerings and provide scalable and secure products to cater to the growing world of connected devices and collaborative services. [2]

The cloud services currently provided by Cisco include Software-as-a-Service (SaaS) offerings such as WebEx, Meraki and Cisco Cloud Web Security for improved collaboration. It also offers cloud building services through its Unified Computing Systems (UCS), NetApp and VCE Vblock systems.

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Notes:
  1. Cisco, Red Hat broaden partnership, eye integrated OpenStack systems, ZDNet, Sept 4 2014 []
  2. Press Release, Cisco, March 24 2014 []