Some of our biggest partners will become core providers of these services.
So how do you compete with Amazon Web Services then?
That idea that you can spend billions of dollars without a return, because you're cross funded by Wall Street, is in a honeymoon period right now. That idea that it's okay to lose money, because 'we're being rewarded with share price growth'. That's a subsidised model. The problem with that model is that you can never go fast enough building out your own datacentres.
The day after we announced InterCloud, Amazon dropped their prices by 40 per cent. Nobody makes money reselling amazon. Amazon doesn't make money when reselling Amazon.
It's like Hotel California. The APIs aren't open. They aren't Openstack. There's no workload portability, if you're an end user or partner, you can't say you're open.
InterCloud is differentiated in terms of scale. It's truly partner centric, which if you compare to AWS, it isn't. The second differentiation, is from a technology point of view, is we're making the whole network programmable, through our ACI (application centric infrastructure).
Isn't this just Software Defined Networking (SDN) by another name?
Well, we're going to open up the entire stack to be programmable. Not just the software layer, but the hardware layer, right down to the ASIC. (Application Specific Integrated Circuit)
Once the infrastructure becomes programmable, that means you can collapse the cost of operating a network, and at the same time offer a differentiated application performance, so for the very first time you can have SAP-as-a-service, for example. The network can dynamically program the quality of service within an application.
The network will dynamically change to suit the usage.
Won't the channel be worried that, with partnerships such as Telstra, which also operates as a reseller, that you could go direct to market, cutting them out?
At Cisco our products are slowing, because products as a whole are slowing, which has significant repercussions for the whole Channel.
What we're attempting to do is to bring our channel partners into the mix. They have seen their margins erode, they've seen single digit growth on hardware, it's been tough.
We still believe that Cloud is going to be delivered in vertical format, so you still need that local industry expertise, but what you're delivering is going to be a collection of managed services that together that represent a solution.
One of the things that I predict you're going to see is that the distributors are going to play a very big role here. The distributors are going to play a role around catalogue creation. They have a lot of resellers all differentiating today, often based upon vertical expertise, and a set of customers with whom they own a billing relationship with, they have that local intimacy.
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