Cisco: “The new datacenter is the multi-cloud datacenter.”

Already one of the biggest players in the red-hot market (it grew 25.8% in the second quarter to $12.3 billion), — in third place with 8.2% marketshare, trailing (11.8%) and HPE (11.1%) — has a lot of credibility when it says cloud is transforming the datacenter. “The new datacenter is the multi-cloud datacenter,” said Tom Edsall, formerly a Cisco Fellow, SVP and GM, Insieme Business Unit, Cisco Systems.

However, he told IT Trends & Analysis, the challenge is now you have an infrastructure that is basically a multi-vendor infrastructure. Rather than just a collection of hardware and software from different vendors, you have to throw in the various cloud providers like and Azure. He said organizations have part of their infrastructure running on different clouds, with different , and are struggling to make the differences disappear.

“The problems that we encountered 10 years ago are happening all over again,” said Edsall. “Then it wasn’t cloud, it was multi-vendor.”

He added that the company has had strong success with on premise with its ACI (Application Centric Infrastructure) portfolio with over 4,000 customers. But while the customers really like the application-centric approach, they are frustrated because “they can’t get the same API at Amazon.” They want to know how do they get a common experience across these systems, said Edsall.

Ever helpful, Cisco recently announced a management and automation platform for its and HyperFlex Systems, Cisco Intersight. To be available 4Q17 in two versions — the Base Edition will be available at no charge, while the will cost you — it is intended to simplify datacenter operations by delivering systems management as-a-service, instead of having to maintain ‘islands of on-premise management infrastructure.’

‘The longer-term vision of Intersight is spot-on,” noted Matt Kimball, senior datacenter analyst, Moor Insights & Strategy. ‘Not only does it address the issues IT organizations face today, but it also provides a platform that can accommodate the unknowns of tomorrow. If Cisco successfully executes this vision, it will firmly position itself as a leader in multi-cloud infrastructure orchestration and management.’

Unsurprisingly, a canned quote included in the Cisco release was equally ebullient: “Organizations that move to cloud-based systems management platforms will find that service delivery quality is significantly improved, the overall risk to the business goes down, and IT staff productivity is increased,” said Matt Eastwood, Senior Vice President, IDC. “Artificial Intelligence (AI) –infused cloud-based management tools can offer deep insights into the state of the infrastructure, identify troubles before they become major issues, and enable quicker ‘root cause’ identification and analysis of issues.”

Edsall said with ACI in the cloud, Amazon looks like just another site. “This is part of a larger plan, ACI Anywhere… removing the dependency of ACI on Nexus 9000 hardware… in my opinion it runs better… but it’s not always possible to do that.”

While the cloud numbers continue to soar — i.e. the cloud datacenter market is expected to reach $67.5 billion by 2023, growing at a CAGR of 28.7% — we’re getting less-stellar results for the on-prem datacenter market. The numbers indicate a market in turmoil:

-cloud spending is on track to catch up to traditional datacenter spending;

-over 80% of companies are planning hybrid environments, meaning the joint use of private data centers and public clouds;

-during 4Q16 revenue for incumbent datacenter hardware vendors fell 5.8% year-to-year, and gross profit declined 6.9%;

-the hyperscale datacenter market is forecast to decline at a CAGR of 11.1% during the period 2017-2021;

-the datacenter colocation market is expected to grow from $31.52 billion in 2017 to $62.30 billion by 2022, at a CAGR of 14.60%; and,

-companies and funds have invested $18.2 billion in US datacenters — double the value of 2016 and on track to surpass the total for the three previous years combined (and US companies account for more than 90% of the global datacenter space).

Edsall believes on-prem and cloud will continue to address different needs of different customers at different times. “In general what we see is it can be less expensive to build your own infrastructure than to get it in the cloud once you’re above a certain size. However, the cloud is much more flexible… so if you have a workload or environment that you want to rapidly expand or contract… then the cloud is an attractive solution for you.”

There are a multitude of variables that can affect the decisions, and those variables are constantly changing, from protocols, security, regulatory and compliance, application availability, etc. Where it makes sense everything that Cisco develops will be developed enabled in the cloud as well as on-prem, said Edsall.

In other news from Cisco, chairman John Chambers has announced he will officially leave the company when his board term expires in December, and the $320-million acquisition of Springpath, a , has been completed. What these mean for the networking — and datacenter — giant going forward remains to be seen, but with the company having reported a 3% revenue drop for its last quarter, and predicting a 1-3% drop for its October quarter, clearly changes are needed.

Good luck on that! Really, I’m a shareholder.

DISCLAIMER: My portfolio includes shares of companies mentioned in this article.

Author: Steve Wexler

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