Cisco Proposes Network as a Service

| About: Cisco Systems, (CSCO)

According to a Cnet report published on Sunday, Cisco Systems (NASDAQ:CSCO) is proposing a design for OpenStack, called Network as a Service [NaaS].

The OpenStack cloud operating system is an open-source platform that provides computers and storage. It was co-developed by Rackspace (NYSE:RAX) and NASA, and is now supported by a broad number of big names, including Dell (NASDAQ:DELL), Intel (NASDAQ:INTC), AMD, Microsoft (NASDAQ:MSFT) and Citrix (NASDAQ:CTXS).

Recently, Equinix (NASDAQ:EQIX), Dell and Rackspace announced that they joined forces to offer an OpenStack demonstration and test environment to customers who will enjoy the ability to move cloud assets between data centers in different regions - the first service of this kind.

Cisco's move may represent an important sign that the market move toward “the cloud” is being embraced by networking vendors as well. As Dave Rosenberg noted at Cnet:

Cisco's proposal is not the first for NaaS, but I believe it signifies an important acceptance not just of a change to the way that we consume compute and networking but a shift in how big companies will make OpenStack both the literal and metaphorical Apache Web server for cloud services.

According to Cisco, there are still several open questions to discuss, but the in future, this Network as a Service could be expanded to support SLA, Network level QoS and other network-based auditing/monitoring services, beyond allowing services like interconnecting two VM instances or providing resources required to interconnect OpenStack “Zones” or geographically dispersed computer/storage resources.

(click to enlarge)

While it is too early to evaluate the practical impact of this proposal, cloud computing remains one the hottest themes in the industry, and on Wall Street, with stocks associated with “the cloud” delivering triple digit returns, on average, in just a few quarters, as shown by Bespoke Investment Goup's cloud computing basket.

Disclosure: I am long EQIX.