The lure of brand and cloud computing

Jo Maitland, Senior Executive Editor

A little known voice-over-IP phone company, 8x8, has dropped a chunk of change on vBlock, the cloud-in-a-box from VCE Company. It's hoping that this powerful trifecta of IT brands -- VCE is backed

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by VMware, Cisco and EMC -- will be enough to lure enterprises to 8X8's cloud computing service.

VCE is to enterprise IT what Coca-Cola is to the soft drink market, so if 8x8 wanted brand, it got it. But brand comes at a price. Huw Rees, vice president of business development at 8x8, based in the Bay Area, said VCE "has the pedigree" to get into enterprise and government clients. He declined to say what 8x8 paid for the box, but it's north of $100K. For larger configurations VCE can cost upward of a million dollars.

That's a considerable price tag, Rees noted. 8x8 has a nice cushion -- $18 million give or take -- so it has cash on hand to invest in infrastructure. But is that money best spent on name-brand cloud basics?

My thought is this: Some customers, in the near term, want cloud and will pay more for VCE-based services. It's a throwback from a previous era, when many IT shops bought IBM gear because no one got fired for buying IBM. People spent more on a brand that made them feel secure even though the actual merits of that brand were open to interpretation.

But it feels like the tide is turning on this formula.

The cloud computing wave has put cheaper IT services at everyone's fingertips; everything you did before now costs much less. Whether it's infrastructure, software development or applications, the cloud version is cheaper. CIOs get this and see it as a way to drive IT costs down. So if you’re betting on expensive cloud, you might be wagering against the house.

What if, instead of spending money on vBlock, 8X8 figured out how to build a cloud infrastructure itself, gained experience, got smarter, more flexible and more self-sufficient, and was able to take more risks because it wasn’t locked into VCE? It has the time. The market for enterprise cloud services has barely begun.

There's no doubt we need more smart people who understand how cloud architectures really work. Customers need that. I'm not sure that we need cloud services to be better labeled.

 Jo Maitland is the Senior Executive Editor of Contact her at

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