Cisco Joins the Cloud Computing Fray with $1 Billion Investment Over Two Years

The Wall Street Journal is reporting that Cisco has changed its mind about moving into the Cloud to help boost revenue. Historically, Cisco has been happy with just supplying the network infrastructure for the Cloud, providing hardware and services to those vendors already established as Cloud providers. But, providing a full Cloud computing presence is becoming harder to ignore for any vendor wanting to continue building revenue.

Amazon, of course, leads in the Cloud provider space already, and Microsoft has made serious inroads in the last couple years, surmounting Amazon's lead in several areas. To help shed a Windows-centric stigma and compete on an even greater level, Microsoft will announce a rebranding of its Cloud-heavy operating system, Windows Azure, this week.

Cisco plans to spend $1 billion and invest the next two years in building a Cloud infrastructure. The amount Cisco plans to spend is not unlike another vendor also announcing its entrance into the Cloud. IBM has recently also announced the same $1 billion investment and has already started paving the way to the Cloud through numerous acquisitions.

Cisco plans to invest the $1 billion in worldwide data centers, powered by Cisco devices, and will brand the offering as "Cisco Cloud Services." This comes at a time when overall spending of Enterprise hardware is down. Enterprise hardware remains Cisco's primary revenue generator, but by developing a Cloud services subscription model, the company hopes to offset the drop in revenue due to shrinking corporate budgets and uncertain world economies.

Cisco will face the same uphill battle with the Cloud as all other vendors. Trust, security, and privacy remain the biggest detractors for fully instated acceptance. How Cisco is able to manage these differently will be interesting to watch. Cisco's devices already power a large portion of corporate networks and the Internet, so the company may already have an advantage on the trust issue.

Cisco has made no formal announcement about its intentions, however, CiscoLive!, the company's own technology conference, happens in May 2014. You can expect a better formulated announcement to happen there, along with roadmaps and details.