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Plan to kill Cisco public cloud highlights the investment needed to compete

The graveyard of public clouds is littered with traditional IT vendors, and it’s about to get a bit more crowded.

Cisco has confirmed a report by The Register that it will shut down its Cisco Intercloud Services public cloud early next year. The company rolled out Intercloud in 2014 with plans to spend $1 billion to create a global interconnection among data center nodes targeted at IoT and software as a service offerings.

The networking giant never hitched its strategy to being a pure infrastructure as a service provider, instead focusing on a hybrid model based on its Intercloud Fabric. The goal was to connect to other cloud providers, both public and private. Those disparate environments could then be coupled with its soon-to-be shuttered OpenStack-based public cloud, which includes a collection of compute, storage and networking.

“The end of Cisco’s Intercloud public cloud is no surprise,” said Dave Bartoletti, principal analyst at Forrester. “We’re long past the time when any vendor can construct a public cloud from some key technology bits, some infrastructure, and a whole mess of partners.”

Cisco will help customers migrate existing workloads off the platform. In a statement the company indicated it expects no “material customer issues as a result of the transition” – a possible indication of the limited customer base using the service. Cisco pledged to continue to act as a connector for hybrid environments despite the dissolution of Intercould Services.

Cisco is hardly the first big-name vendor to enter this space with a bang and exit with a whimper. AT&T, Dell, HPE — twice — and Verizon all planned to be major players only to later back out. Companies such as Rackspace and VMware still operate public clouds but have deemphasized those services and reconfigured their cloud strategy around partnerships with market leaders.

Of course, legacy vendors are not inherently denied success in the public cloud, though clearly the transition to an on-demand model involves some growing pains. Microsoft Azure is the closest rival to Amazon Web Services (AWS) after some early struggles. IBM hasn’t found the success it likely expected when it bought bare metal provider SoftLayer, but it now has some buzz around Watson and some of its higher-level services. Even Oracle, which famously derided cloud years ago, is seen as a dark horse by some after it spent years on a rebuilt public cloud.

To compete in the public cloud means a massive commitment to resources. AWS, which essentially created the notion of public cloud infrastructure a decade ago and still holds a sizable lead over its nearest competitors, says it adds enough server capacity every day to accommodate the entire Amazon.com data center demand from 2005. Google says it spent $27 billion over the past three years to build Google Cloud Platform — and is still seen as a distant third in the market.

Public cloud also has become much more than just commodity VMs. Providers continue to extend infrastructure and development tools. AWS alone has 92 unique services for customers.

“We don’t expect any new global public clouds to emerge anytime soon,” Bartoletti said. “The barriers to entry are way too high.”

Intercloud won’t be alone in its public flogging on the way to the scrap heap, but high-profile public cloud obits will become fewer and farther between in 2017 and beyond — simply because there’s no room left to try and fail.

Trevor Jones is a news writer with SearchCloudComputing and SearchAWS. Contact him at tjones@techtarget.com.

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