Cisco president: One 'hiccup' and 'boom' – AWS is 'gone' Cisco is the latest member of the technology old guard to take a pop at Amazon Web Services, claiming that the public cloud giant’s financials mean “one hiccup” and it could go bust. AWS-bashing is almost becoming an annual feature at Canalys Channels Forum; in 2014 the analyst estimated AWS was losing billions of dollars; and …
If the only thing to worry about is company financials, then the technical side is looking rather good.
Of course, I'm not saying there is no problem. If Amazon folds, there will be major chaos in many companies and that will translate into losing money - probably a lot of money.
On the other hand, with that risk in mind, if Cloudageddon does happen, I think there will be a linup of companies at Amazon's door with checkbook in hand to tide things over until stability can be found again - or at least until they can extract their data and move to (gulp) Azure.
After all, from a business standpoint, what is worse : upping the IT cost by a factor of two or three, or closing shop ?
The only thing I see that is really a risk here is that, if the financials fail, it will likely be sudden. I'm not sure that Accounting is all that Agile.
or at least until they can extract their data and move to (gulp) Azure.
As a short term fix. If the financial benefits of cloud turn out to be based on chronically unhealthy vendors, selling at a loss, then a big hiccup (be that AWS or any other big cloudy-wouder) would allow and force the remaining vendors to put prices up (thus reducing customer benefits), and the nebulous nature of cloud would finally become very apparent, and corporate buyers would start wondering whether this all stacked up.
Of course, in the short term Amazon have $16.5bn in cash, so they hardly need somebody else to bail them out. Having said that, the balance sheet shows the company issued equity at a value of $16.5bn, suggesting that taking the cash out, the company is worthless because all of the assets are only the same value as the liabilities.....
I think the real question isn't so much whether Accounting is all that Agile, but whether those who step in if and when a cloud provider such as Amazon folds are Agile.
There are some good and I suggest relevant write-ups on events at Hanjin Shipping since it went bankrupt in August this year. I think it is far to regard a cloud data centre as a container ship at sea...
While the rates are low borrow like hell, create an environment to tie the punters in, stifle the competition and produce a global near-monopoly.
Rope the punters some more, make sure the shackles are really tight.
Then, oops, financials aren't so good, our profits aren't as high as we expected, pay us double for our product which you totally rely on or lose it at the end of the month ... please.
"Then, oops, financials aren't so good, our profits aren't as high as we expected, pay us double for our product which you totally rely on or lose it at the end of the month ... please."
Yes, it is a risk. Funny thing is, to the company I work for, AWS prices could increase 4 times - and would still be a good deal.
Obviously this is not true to everyone. But for us...
I was (still am) an AWS basher for many years, as I could always deliver Data Center requirements at my old company far cheaper than AWS.
Role on a year, I landed a new role and discovered the company had outsourced its entire Data Center operation and was being fleeced for it, so when they investigated AWS by comparison is was amazingly attractive, coming in at 1/10th the cost..
So whilst its saving them money, the reason they are in this position is down to bad IT management (or lack of it rather) in the first place.. and it would still be more cost effective to do it in-house, but hey, thats no longer my role, so I let them get on with it..
A/C to protect the innocent!
„Yes, it is a risk. Funny thing is, to the company I work for, AWS prices could increase 4 times - and would still be a good deal.“
I had to LOL (well: chuckle) about this: you're assuming that when Amazon-prices increase, everything else stays the same - ceteris paribus in latin - but that rarely happens in such situations.
If there is a economic hiccup Cisco goes even further under? More mass layoffs, huge migration to SDN. Cisco is losing full basis points on a quarterly basis. By January Cisco will be all in with AWS just like VMware just did. My guess is he isn't inline to replace the last CTO they just ejected.. The economy is exactly what is driving companies to abandon infrastructure and go to AWS?
My timestamp on this article says 14 Oct 2016 at 11:39, and lo presto, at 14 Oct 2016 at 15:08 I see:
"Cisco's cloud whisperer CTO Zorawar Biri Singh blows free"
"His role was to drive “thought leadership” around Cisco’s technology roadmap, platforms and architectures. Singh would, we were told, set the foundation” for Cisco’s long-term investments.
Less than two years on, however, and Cisco is slashing heads: seven per cent of its global workforce, some 5,500 people, are getting canned in the current financial year and Singh is one of the casualties."
Hmm.
According to Amazon's published financials the company is profitable with or without AWS. And AWS is their most profitable division. Amazon seems to be growing in both total customers and profitable ways to separate the customers' money for various product and services. Amazon is originally a retailer and is used to retail markups which are not all that high. Cisco and other kit manufacturers are not used to retail style margins so they do not understand how Amazon or AWS can be profitable or how any retailer survives.
It's getting desperate at Cisco. The shift away from SP to a solely Enterprise-like business (just look at who mostly got LR'd recently), for DC, Cloud and all that comes along with that.
Chuck is without a doubt a terrible choice for Cisco at this moment. A disconnected individual, surrounding himself with some of the most out of touch people you can imagine. He even seems to revel in providing material to prove this, for example recently announcing internally that Cisco needs to refocus on IETF and legacy standards bodies. Clearly he seems not to have noticed that OpenSource and open hardware has moved the world on and 2-4 years for a standard from IETF is a model of the past...
The refocus on Enterprise comes just at the time when OTT cloud services, AWS, Microsoft etc, are about transform Enterprise exactly as has already happened to OTT services for residential.
What foothold does Cisco have in OTT today? Pretty much zero.
There was always an internal giggle when Cisco would announce they where 'Number 1 in Cloud' at ra--ra all-hands events. At the same time the CPSs, AWS, Google, FB, MS etc, had already stopped buying ToR switches and servers from any major vendor and where designing and outsourcing the build for whitebox replacements, ordering these units in the millions.
The trend continues down to optical, bye bye Cisco proprietary, and hello grey optics at 80% cost reduction. Not only are the CSPs designing them and publishing the specs, but they can purchase them cheaper than Cisco can, since it's all about volume.
So what is Cisco's answer? Well it appears to be the same as Marconi and others ghosts have done. Focus back on previous revenue streams and try to milk them a little more. do a bunch of increasingly desperate LRs to shore up the revenue margins so as not to get hammer in the market on stock pricing.
Of course they make a lot of noise about new business and re-focus this that... but essentially it's emperors new clothes time.
Thing is, very dog has it's day, and Cisco has likely had it's time run out of 'woof'.
AWS ... go bust? Errr. right. Even if AWS wasn't backed by Amazon's e-commerce money machine it's still in its own right a very sophisticated, feature-rich, aggressively priced and extremely popular cloud environment - it's head and shoulders above the competition (and what is the competition anyway.. Azure, Google... err.. Rackspace? It drops off real quick after the first few). From where I sit Amazon practically own the cloud computing game already, and for some concrete reasons.
Cisco are just pissed because the major server farm players don't buy much of their stuff any more.
In the beginning was a '0' and the great computer scientist in the sky said "No use let's add a '1' then we can really get going" and it's been a bit down hill ever since then.
IT kit has followed an almost Darwinian path, but instead of it being the fittest wins, it has been the cheapest useful combination of processor\memory\display\comms wins, . with each new technological\enginnering advance enabling a new <ahem> paradigm to take over.
Which is fantastic for the marketeers and Businees Bullshit shovellers.
So we've gone from big iron tended by priests fed by punched cards to terminals to minis to desktop machines to tablets and phones with high bandwidth comms enabling t'internet and bit barns. What happens next? Dunno; if I did i would be sending this from my yacht parked off my own desert island.
But I'll bet it will be a combination of cheap capable hardware with a rearrangement of the current paradigm, The big fear for me of Bit Barns is not so much that the company will go pop but that the infrastructure will be hacked and trashed burning the Barn down.
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