Market Move - Cisco wants to buy Metacloud - getting more into the cloud game

This morning Cisco announced its intent to acquire Pasadena based Metacloud. It has been quiet over at Cisco since the launch of the Cisco Intercloud earlier this year. So it’s a good sign we some action around Cisco’s cloud plans.
 

Let’s dissect the press release in our usual style, commenting on the new:

[…] Cisco today announced its intent to acquire privately held Metacloud. Based in Pasadena, Calif., Metacloud deploys and operates private clouds for global organizations with a unique OpenStack-as-a-Service model that delivers and remotely operates production-ready private clouds in a customer’s data center.

MyPOV – Metacloud is one of the many vendors looking to make it big in the OpenStack market. It’s OpenStack as a service model is an interesting, but not unique approach (e.g. Platform9 was covered by us in a blog post recently. But given the relative complexities enterprises face installing and operating OpenStack private cloud, this will certainly help Cisco’s Intercloud customers and may well attract prospects.

Metacloud’s OpenStack-based cloud platform will accelerate Cisco’s strategy to build the world's largest global Intercloud, a network of clouds, together with key partners to address customer requirements for a globally distributed, highly secure cloud platform capable of meeting the robust demands of the Internet of Everything. Since announcing its Intercloud strategy in March, Cisco has made rapid progress, enlisting key technology partners, service and cloud providers, all of whom are standardizing upon the Cisco Cloud Services architecture, which is based on OpenStack open source software for building private and public clouds.

With OpenStack gaining global acceptance through its ability to handle any workload on any hypervisor on any public or private cloud, the ability to manage OpenStack installations at scale is a critical component of Cisco’s Intercloud strategy. Cisco’s acquisition of Metacloud’s remote managed OpenStack Private Cloud-as-a-Service platform will play an increasingly important role in accelerating Cisco customers’ journey to the cloud, enabling enterprises to match the as-a-Service operational benefits of public cloud with the security and control provided by private cloud. Metacloud also will allow service providers to combine their public cloud deployments with remotely managed OpenStack private clouds, and to deliver unique Intercloud offerings to their customers.

MyPOV – I am sure Cisco has made progress – but it was less visible than above states – it recently partnered with RedHat on an integrated OpenStack datacenter infrastructure.

“Cloud computing has dramatically changed the IT landscape. To enable greater business agility and lower costs, organizations are shifting from an on-premise IT structure to hybrid IT – a mix of private cloud, public cloud, and on-premise applications,” said Hilton Romanski, senior vice president, Cisco Corporate Development. “The resulting silos present a challenge to IT administrators, as choice, visibility, data sovereignty and protection in this world of many clouds requires an open platform. We believe Metacloud’s technology will play a critical role in enabling our customers to experience a seamless journey to a new world of many clouds, providing choice, flexibility, and data governance.”

MyPOV – We agree on the direction, but MetaCloud is also interesting in the opposite sense, that a service provider runs an on premise private cloud. There will be enterprises who will chose to monitor their OpenStack powered private cloud through a public cloud console, but the larger potential are customers who simply don’t want to manage their own data center anymore. This is an opportunity for Cisco and partners. And many customers may be open to purchase Cisco Severs – having space in their data centers – if Cisco can show that operating them is cheaper than in other (public?) clouds.

Upon completion of the acquisition, Metacloud employees will join Cisco’s Cloud Infrastructure and Managed Services organization led by Faiyaz Shahpurwala, senior vice president. The acquisition of Metacloud is expected to be complete in the first quarter of fiscal year 2015, subject to customary closing

MyPOV – And there we have it – joining the ‘… managed Services’ organization. Certainly a good business opportunity.

Overall MyPOV

Certainly a good move by Cisco, that like other OpenStack players has realized that there are not only benefits using OpenStack, but serious complexities in implementing and operating OpenStack clouds. If my speculation is right, the Metacloud capabilities will give Cisco the opportunity to run more customer data centers as a service for them. It may also give Cisco the opportunity to run other hardware vendors’ servers. Let’s not forget that for Cisco professional services – always assuming performed right – are helping the company’s overall margin. The future will certainly hold some interesting dynamics here.

And lastly – as I have pointed out before – the crux of the overall cloud game is – who spends the CAPEX for the servers and data centers? The large public clouds maintain themselves, but later entries in the cloud market have to do a lot of investment to catch up. Metacloud allows Cisco to have its customers buy servers – located in a customer or a Cisco datacenter – and even administered by Cisco or a 3rd party. As long as the TCO looks more attractive than the status quo or other buying alternative, then all ends well.