A billion dollars sounds like a lot of money. And it is. Yet, when Cisco says its going to spend $1 billion over the next two years to get into the cloud business, I wonder who they think they are kidding?

Does Cisco think the billion, once spent, will position them solidly against Amazon and the  dwarfs? Or do they expect to spend a lot more, as I think they must.

Cisco Buys Rackspace?

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Arik Hesseldahl at Re/Code points out that Cisco’s strategy, which relies of developing a global cloud partner network almost cries out for an acquisition.

Cisco is counting on partners to offer the country-specific clouds that some companies are required to use and more are likely to find necessary or want in the post-Snowden world. The best way get seriously into the cloud, right now, would be a purchase.

With $47 billion in cash and short-term investments, Hesseldahl points out that the $6 billion it might cost for Cisco to acquire (an overpriced) Rackspace could be money well spent. Rackspace would extend Cisco’s offering and bring an immediate influx of customers. Such a deal would demonstrate that Cisco is really serious and willing to buy its way into the cloud game.

Cisco calls its offering InterCloud, to be built using OpenStack, the open source cloud platform created at NASA and also used at RackSpace. That’s a good omen for the two working together.

The Best Time is Now

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If Cisco wants to buy, however, it better hurry. Rackspace’s share price could be on the mend after the recent 40 percent loss sparked by a surprise management shakeup. If the stock goes up, Rackspace could be priced out of the market, except that, from Cisco’s perspective, there aren’t many US acquisitions that are possible. And Rackspace might be a motivated seller.

Buying up some overseas cloud providers is also possible, though investment rather than purchase may be the best way for Cisco to cement important partnerships.

• Cisco Committed to Hybrid

Dollars aside, Cisco comes to the table with an interesting proposition, which is a headlong dive into hybrid cloud. The sort of cloud that Cisco’s infrastructure hardware might be perfect for optimizing. The downside of that, of course, will be the any attempt to use the InterCloud and hardware together of create customer lock-in.

One whiff of Cisco not playing well with the other kids, ought to make customers kick Cisco off the playground.

Much has been made of the cloud itself and not so much of how companies operate, with systems that simply can’t (or just very much don’t want to) move to the cloud anytime soon.

• Amazon’s Hybrid Strategy?

Amazon has developed a reputation for keeping its customers away from hybrid solutions, which are likely to be much more complex than Amazon’s current offerings. Some see this as the weakest link in Amazon’s strategy.

The longer it takes Amazon to fully embrace hybrid cloud the easier it will be for Cisco, HP, Dell, IBM, Microsoft, et al, to hone their offerings. Each of those companies also have customers and skills that Amazon may find itself lacking.

Overall, I think Cisco is in the right place, maybe even doing the right thing, at the wrong time. I’d like to feel a lot more optimistic about InterCloud than I do. Good investments, partnerships and purchases — soon — could help convince me and probably a lot of other people that Cisco in the cloud is for real.

photo: mandolux via photopin cc