Editor’s note: Expect Cisco to acquire hybrid cloud management and orchestration software and expand its hyperconverged solutions to effectively compete with HPE, Dell, EMC and Nutanix. So believe analysts Andrew Smith and Patrick Filkins at Technology Business Research break down what’s happening inside Cisco in the last of a three-part review. Parts one and two are linked with this post as well as an analysis of Cisco’s earnings report last week.

HAMPTON, N.H. – We Expect Cisco to acquire hybrid cloud management and orchestration software and expand its hyperconverged solutions to effectively compete with HPE, Dell, EMC and Nutanix

At the beginning of March Cisco announced the planned acquisition of CliQr Technologies, a developer of cloud orchestration software. CliQr solutions provide cloud application orchestration, migration and automation across cloud service providers. The acquisition adds essential capabilities to Cisco’s portfolio, which will allow it to provision test and development capabilities, and secure data and applications that span multitenant, federated cloud environments. The acquisition strengthens Cisco’s Intercloud value proposition by allowing customers to use these tools as part of a single platform.

This may be the first of several acquisitions that Cisco makes in the space. CliQr has existing technology alliances with leading configuration and cloud management vendors such as Chef, New Relic, Puppet and SaltStack. Adding tools and platforms from these vendors to Cisco’s arsenal could allow Cisco to stitch together a unique set of capabilities that helps customers establish a DevOps life cycle across their data center, networking and hybrid cloud assets.

[More coverage: Watch a video about hyperconverged solutions at:

https://www.youtube.com/watch?v=UjAJSYSGZsQ ]

Cisco (Nasdaq: CSCO) also expanded its hyperconverged solutions set with the release of HyperFlex in early March. Cisco’s HyperFlex solutions are engineered to converge a customers’ networking fabric (Nexus), UCS compute, storage and hypervisor software into one stack. The release of a hyperconverged solution gives Cisco a novel way to manage the increasing convergence of its data center and networking capabilities within software-defined architectures.

The vendor’s HyperFlex solutions will also allow Cisco to expand its reach vertically to the applications and analytics running on its platforms, creating new opportunities for Cisco’s ONE Software solutions and services, which help HyperFlex customers extend their application deployments to a hybrid cloud environment.

This is the key opportunity for Cisco with HyperFlex: It adds another avenue of cloud migration for customers, underpinned by Cisco’s portfolio of cloud-enabling software and hardware. This approach will be critical for Cisco’s success over the long term, especially as the company looks to accelerate cloud migration for customers with significant investments in on-premises solutions.

Cloud represents an area in which Cisco will compete with its new top partner, Ericsson; Huawei’s enterprise ambitions are underpinned by a similar cloud strategy

Only several months removed from announcing its historic but loosely defined alliance with Cisco to tackle the challenges of “cloud, mobility and digitization,” in February Ericsson announced a partnership with Amazon Web Services (AWS) whereby Ericsson will develop technology to create portability between its telecom customers’ infrastructure and AWS’ data centers. However, enabling connectivity between cloud data centers is a similar role that Cisco provides to its Intercloud ecosystem of which a large portion are telecom operators.

Additionally, during Ericsson’s 1Q16 earnings call, the company announced its own reorganization centered on cloud platforms and services. Telecom operators expecting combined solutions will likely be presented with alternative paths to migrating to the cloud.

Additionally, Cisco will increasingly contend with Huawei, now the leading telecom vendor in revenue. Huawei addresses cloud infrastructure in a similar fashion to Cisco by offering an ACI-like solution it calls Application Driven Networking (ADN) and by providing its own set of cloud fabrics and cloud data center infrastructure. While Huawei is later to the market, its pricing strategies and growing global brand have enabled it to win placement in Deutsche Telekom’s and Telefonica’s “cloudification” projects and among enterprises.

However, similar to Cisco, Huawei’s growth is primarily due to hardware sales, as it contends with its own lack of lead-in services. Huawei is funneling investment to build up these capabilities, though, while Cisco is less aggressive around services.

Conclusion

TBR maintains concerted restructuring is necessary if Cisco is to continue innovating in an ICT landscape defined by its customers’ “cloud-first” mentality. Additionally, as virtualization is moving the network components deeper into and merging with the data center, networking is increasingly about being a hyperconverged platform player across networking, compute and storage (horizontal play) and offering analytics and apps (vertical play) to deliver value.

TBR believes Cisco, amid a select group of peers, possesses the financial resources, technical capabilities and early traction needed to deliver hybrid cloud solutions in this new world. However, Cisco’s Intercloud momentum is slowing two years removed from its launch. To effectively move data and applications across Intercloud, partners are required to either adopt Cisco’s cloud infrastructure or reconfigure their systems to run Cisco’s version of OpenStack.

As more and more OpenStack cloud competitors deliver alternative storage, networking and management tools to enable hybrid cloud, Cisco will need to continue expanding its interoperability with other vendors to appeal to OpenStack customers hesitant to go “all in” with Cisco.

(C) TBR