2 Outs and 1 In

Cisco Systems Inc. stated it plans to exit aspects of its consumer businesses and realign the remaining consumer business while Iron Mountain Inc. informed users it would be shutting down its cloud-based storage offerings. Meanwhile, IBM Corp. introduced two tiers of cloud computing services.

Focal Points:

• Cisco is shutting down its Flip operations but is keeping part of its consumer video business as it goes through a restructuring. However it will continue support for its current FlipShare customers. The company said it will support four of its five key company priorities in core routing, switching and services; collaboration; architectures; and video. The Home Networking business will be refocused so that it can attain greater profitability and connection to the company's core networking infrastructure as the network expands into a home video platform. The umi personal video service will be folded into the Business TelePresence product line.
• Iron Mountain is planning to shutter its cloud-based storage infrastructure-as-a-service (IaaS) offerings after only two years in the business. The company intends to shut down its public cloud storage division by mid-2013 and has already stopped accepting new customers, according to industry sources. The company will continue to offer cloud storage services to existing customers and help them migrate to another vendor as part of the closure process. Iron Mountain had offered two public cloud storage solutions: Virtual File Store (VFS) and Archive Service Platform (ASP). VFS customers will be upgraded to the File System Archiving service in 2012, but ASP customers will not be migrated to another system and will have their contracts terminated. The company is the third storage provider to exit the business after Vaultscape Inc. and EMC Corp. Both those companies shuttered their service offerings last year after one year of service.
• Last week IBM announced its latest public and private cloud offerings at its Cloud Forum in San Francisco. The two new tiers of cloud services are part of the IBM SmartCloud service offerings. The Enterprise service offering is an IaaS offering similar to those from Amazon.com Inc.'s Amazon Web Services. Customers can deploy Microsoft Corp. Windows or Linux applications in IBM data centers. IBM claims it will guarantee 99.5 percent uptime annually. The second service offering, Enterprise Plus, provides higher levels of security and a 99.9 percent uptime guarantee, plus the option to run virtual machines on dedicated hardware, rather than servers shared with other customers, and the option to use IBM's AIX operating system as well Windows and Linux. Enterprise Plus users also have access to more flexible availability, management, and security options. IBM will manage just the hardware and hypervisors, for example, or almost any combination of the application, middleware, operating system, or entire business process. In addition, IBM is applying the pay-as-you-go pricing model to some of its software products. The new pricing scheme will let application service providers that offer their software as a service pay for 20 of IBM's most popular software products, including WebSphere Application Server and IBM DB2, on a monthly basis as they use it. As part of the model, IBM is incorporating loyalty pricing so that the more the customer commits to higher usage levels, the greater the discount. IBM is also providing zero percent financing options for companies that are building clouds. The financing covers hardware, software and services.

Experton Group believes Cisco's strategies over the past ten years have not panned out well for the company and its stockholders. From a pure stock valuation standpoint Microsoft has lost less in value than Cisco, which is not a good thing. CEO John Chambers needs to restructure the company to improve both its top and bottom lines. Its foray into servers has harmed its core router and switching business, as its former server business partners now vie for Cisco's networking business. IT executives should look for a multitude of changes in Cisco's approach to the market over the next few months. The storage IaaS business appears to be collapsing and, as Experton Group predicted last year, the IaaS market may itself fade away, as users want some services in addition to the infrastructure. IT executives should expect to see the IaaS providers either pull out of the market or move up to become Platform-as-a-Service (PaaS) providers. Furthermore, Iron Mountain customers should accept the company's offer to assist them in their migration off of their IaaS offering, as it is a free service, and should get the new service provider to waive onboarding charges or get Iron Mountain to pay them. IBM's moves were not unexpected, as the company has been expanding its cloud offerings over the past year and these two offerings are a natural extension. IBM's financing options should garner a lot of attention in the ISV community and are a nice added touch that will entice users to consider IBM for cloud services. IT executives should understand all of the IBM cloud offering options, including the financing, and consider making IBM one of the short-listed providers so that they get the best competitive pricing and terms and conditions.