Cisco, Google team up in cloud

Partnership aimed at broadening ease of apps

Cisco and Google announced a partnership Wednesday that will allow companies to develop applications that can run on a firm’s own premises or through Google Cloud.

Some analysts said the partnership helps Google Cloud better compete with Microsoft, which already offers a hybrid cloud service. Last year, Google held a 4.1 percent market share in cloud-related infrastructure and platform services, compared to Microsoft’s 11.7 percent market share, according to research firm IDC.

Through its new partnership, Google Cloud could gain corporate clients that use Cisco’s

tools. Cisco also benefits because its customers can more seamlessly use services on premises and through Google Cloud.

“We think this gives the customers the best of both worlds,” Kip Compton, a Cisco vice president of the company’s cloud platform and solutions group, said in an interview.

Google Cloud has been touted by its parent company Alphabet as a vital part of Google’s business, even though much of Google’s revenues still come through advertising. Alphabet does not break out exactly how much Google Cloud generates in sales. Instead, sales from Cloud services are lumped with other non-advertising revenue like app sales in its Google Play store and hardware like Internetconnected speaker Google Home. That category, called “Google other revenues,” generated about $10 billion in 2016, up from $7.2 billion a year earlier, Alphabet said.

Google still remains behind Microsoft and Amazon in the cloud business because it started later than its rivals, said Larry Carvalho, an IDC research manager. Many analysts believe Google’s 2015 hiring of Diane Greene, a co-founder of cloud software company VMWare, indicates the company’s commitment to building its cloud business.

Rob Enderle, principal analyst with advisory services firm Enderle Group, said the partnership with Cisco will give Google more “street cred” and “maturity” with business customers.

“Cisco brings with them that they are truly an enterprise provider,” Enderle said. “They understand what large companies want and need.”

More companies are interested in shifting their services to run on a hybrid cloud model, where apps can run on a firm’s premises and also through cloud service providers. More than 80 percent of medium and large businesses that use data centers and have more than 100 servers on their premises plan to use a hybrid cloud model in the next two years, according to a survey of North American companies by research firm IHS Markit.

For Cisco, it makes more business sense to partner with cloud service providers like Google, rather than try to directly compete with them, analysts said. Unlike cloud service providers such as Google or Amazon, Cisco lacks the scale to compete on price, and it’s hard to compete on innovation, said Cliff Grossner, a senior research director at IHS Markit.

He called the Google partnership a “good move by Cisco and that keeps them in the market.”

Nan Boden, head of global technology partners for Google Cloud, wrote in a blog post that “developers will be able to create new applications in the cloud or on-premises consistently using the same tools, run-time and production environment.”

The hybrid cloud service through the partnership will become available next year.