Cisco has plenty of potential as a public cloud provider, but it needs to overcome several challenges before it can take on the likes of Microsoft, Google and Amazon.

The latest report by the DatacenterDynamics Intelligence unit (DCDi) suggests that the networking vendor will have to work extra hard to differentiate its Intercloud offering from services offered by its well-established competitors.

In order for Intercloud to succeed, Cisco will have to grow its network of partners as quickly as possible. But more importantly, it will have to find a way to avoid conflict with existing partners and customers, who might run their own public cloud services on top of its hardware products.

A rising tide lifts all boats
Cisco is the world’s largest vendor of networking equipment, with a market cap of US$129 billion. In recent years, it has been moving away from routing and switching products to servers, and now cloud services.

In March 2014, Cisco announced the Intercloud initiative – an effort to create a unified cloud platform that would support any workload, any hypervisor and any type of cloud. It runs through a network of data centres owned by the company and its partners.

The success of Intercloud relies in part on the development of Cisco Cloud Services – the first ever services that the company sells directly to end-users, as well as through the channel. These include Infrastructure-as-a-Service, SAP HANA-as-a-Service and Virtual Desktop-as-a-Service, among others.

Cisco is investing US$2bn over two years to develop more partnerships, data centres, cloud products and services.

DCDi suggests that Cisco's own cloud platform could restore growth to the business which has seen its revenue decline in 2014. The Intercloud is also tied into Cisco’s vision for the Internet of Things (IoT) – which it sees as a huge opportunity for a distributed, geographically diverse cloud platform.

Cisco has already signed up 41 members of the Intercloud, but it will need an even bigger network to ensure global coverage. The success of its cloud services will also depend on their price, which has been driven down by public cloud juggernauts like AWS.

Finally, Cisco will now need to carefully manage its relationships with cloud providers who purchase its networking gear, to ensure that any potential fallout from such situations is mitigated where possible.

The full report contains a breakdown of key elements of Intercloud, a detailed list of partners and further information on the challenges facing the company.

You can find the full briefing here.