Cisco Plans To Invest More Than $1B In Cloud Computing Over The Next 2 years

Cisco Systems Inc. (NASDAQ:CSCO) announced its plans on Monday to offer cloud-computing services and pledged to invest more than $1 billion to smooth its entry into the business over the next two years.

According to the company, it will invest the amount in building data centers to help run the new service called Cisco Cloud Services, Reuters reported, adding that the company wants to deliver the service with and through its partners, including Telstra Corporation Ltd (ASX:TLS), an Australian telecom service provider, Ingram Micro Inc. (NYSE:IM) and Wipro Limited (ADR) (NYSE:WIT).

“Customers, providers and channel partners ... want to rapidly deploy valuable enterprise-class cloud experiences for key customers -- all while mitigating the risk of capital investment,” Rob Lloyd, Cisco's president of development and sales, said in a statement.

According to the Reuters report, spending on enterprise hardware is declining worldwide as companies tackle shrinking budgets and slowing economies by outsourcing data management and computing needs and migrating to cloud computing, effectively reducing demand for equipment.

“The Cisco global Intercloud is being architected for the Internet of Everything, with a distributed network and security architecture designed for high-value application workloads, real-time analytics, ‘near infinite’ scalability and full compliance with local data sovereignty laws,” the company said in the statement.

Cisco currently generates about $4.2 billion from cloud-based activities, out of a total of $49 billion in annual revenues. The company’s revenue declined by almost 8 percent in the most recent quarter, and it said last month that revenue in the current quarter could decline an additional 6 percent to 8 percent.

“Our customers will now have access to cloud infrastructure from a global leader, allowing them to select the cloud service to meet their requirements and scale network and cloud resources to deliver service agility, security and performance,” Erez Yarkoni, the executive director of Cloud, Global Enterprise and Services at Telstra, said in a statement.