February 15, 2017

What Does Intercloud Shutdown Mean for Communications Service Providers?

BLog Post Title Underline by John Macario

Resale has become a familiar business model for SP/VARs in the Unified Communications (UC) space. A big communications company provides a service that service providers can repackage and resell, and the additional value can be the method of installation, expertise, and support. But what happens if the service they're re-selling is cut off?

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For some service providers, that question may be looming, since Cisco has recently shut down its Intercloud service. This solution was adjacent to Cisco HCS and Spark, which many CSPs use to provide turnkey UCaaS services. Could these be next on the chopping block?

What's Intercloud, and Why Might CSPs Worry?

At the outset, Intercloud was to be an answer to AWS and Microsoft Azure. Most companies, if they're pursuing a large-scale cloud strategy at all, have chosen one of those two services. The service was to be a sort of operating system that would allow companies to easily move workloads between clouds from different vendors.

Unfortunately, no one seemed to want this service. Most companies appear to be focused on moving their data between public and private clouds at will. Thus, Intercloud never found a market.

Additionally, Cisco's Hosted Collaboration Solution (HCS) and its Spark service also fall under the cloud collaboration umbrella. Of the two services, Spark is clearly the more UC-focused, with businesses able to purchase HCS separately in order to provide services such as call control. Service providers can also, as stated, purchase HCS and resell it to create a UCaaS offering. Given the failure of Intercloud, what might happen to throw a stumbling block in the path of these other cloud communications services?

Potential Stumbling Blocks for HCS and Spark

One potential problem is cost. Purchasing HCS as a UCaaS service gives service providers everything they need to resell the package. That includes hardware, software, and licenses. This can be a problem—purchasing all of this material racks up a hefty cost, and can put this solution out of reach for smaller service providers. If this solution fails to gain traction among smaller and mid-tier SP/VARs, its future could be in jeopardy.

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Can Cisco bring down the cost? One method might involve allowing service providers to resell the cloud service on its own, without requiring them to purchase infrastructure and licenses for resale. This model would allow services providers to scale more naturally with their clients, offering just cloud services to begin with, and then slowly replacing the pre-existing infrastructure with Cisco equipment.

Can Spark and HCS Coexist?

The other potential stumbling block is that HCS and Spark appear to be in competition with each other. HCS looks like a service model that involves large-scale rip-and-replace, requiring companies to upend their corporate infrastructure. Cisco Spark, on the other hand, appears to be an over the top (OTT) service offering that replicates Slack's Unified Collaboration tools. The only infrastructure centerpiece involved is the Spark Board, an intelligent whiteboard that doubles as a videoconferencing solution.

If future trends are any indication, services like Slack and Spark are only going to continue growing in popularity. Can the same be said for more resource-intensive service offerings like HCS?

No matter what the outcome, Edgewater Networks remains committed to providing a vendor-neutral approach to VoIP security and monitoring via Intelligent Edge solutions. For some more predictions about the future of VoIP, check out our white paper, "Digital Transformation at the Edge."

White Paper: Digital Transformation at the Edge—How Service Providers Can Stay Ahead of Disruptionhe Four Pillars of VoIP Security

Topics: Service Providers, Unified Communications

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