After a
fellow classmate told our group to check out an article about Cisco entering
the cloud market, we decided to research and write about that this week. For
those of you who don’t know, Cisco is a leading manufacturing company that
produces networking hardware for computers. They also make computer related
“accessories” such as routers. They have been established for 30 years and have
very loyal and dedicated customers. Their business however has been on a
decline since the cloud service has become more and more popular.
As we all
know, Amazon and Google are the largest companies that use cloud services and
do very well with their profits from it. The companies dominating the cloud
market are not Cisco customers, which means their sales are consistently
declining. The reason the companies dominating are profiting so much from the
cloud system is because they are now buying less expensive equipment from other
countries that can cost up to 60% less than Cisco’s prices (Bort). Cisco is
running out of options to keep up with the competition, so they’ve come up with
a huge plan to help them become a leading competitor.
Cisco
recently announced their $1 billion plan to build a new cloud service called
the “inter-cloud”. Companies are now investing in the cloud apposed to
buying new computers and software which is really hurting Cisco. Cisco
didn’t want to enter the cloud game when it was first introduced because many
of their customers are service providers who sell cloud services (Bort).
However with their sales declining they had no other options, than to enter
into the cloud world. They plan on spending the $1 billion to build new data
centers, and help run the new service (Sen). Since companies are no longer
buying Ciscos hardware or machinery they plan on renting computing services to
both new and existing customers. Even though entering into the cloud systems
world was the last thing Cisco wanted to do, it seems they are running out of
options.
Sources:
This topic on Cisco and cloud computing is really intriguing. Cloud computing was never an interest of mine. When reading your blog, I was thinking if spending all this money on cloud computing for the company, if they will actually be competitive and be able to make a profit.
ReplyDeleteIf the loyal customers for Cisco like this idea and use it, those customers can bring in more monetary value for the company by recommending the product to others.
I hope to see Cisco fix this problem and make an earning.
I never knew much about cloud computing either before this project, but I find it to be very interesting. I think many companies are being forced to enter into the cloud system world in order to keep up with their customers demands. Although Cisco is having to pay a significant amount of money to enter the industry, I think they will definitely profit in the long run.
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