Boston, MA – The Wall Street Journal reports that networking giants, Cisco Systems, Inc. (NASDAQ:CSCO) is planning to invest $1 billion in cloud computing services, over the next two years. The last couple of years has seen the trend of a shift to everything cloud, in the IT services. Cisco will be expecting to construct data centers that will offer cloud computing services to their clients.

Cloud computing – What is it?

Cloud computing is the outsourcing the IT infrastructure and other services related to such third parties. These third parties manage the information cores. Companies can make use of web based services to get access to the data and information, from anywhere in the globe by just connecting to the internet. The above idea helps companies save a great deal of costs on infrastructure and also management costs that occur with them.

Look at the present scenario

The present market in the cloud segment is dominated by Amazon.com, Inc.’s, Amazon Web Services and this alone contributes over $3 billion each year to the company’s revenues. The retail giant is considered to be well placed in the cloud computing industry and is showing good progress.

Cisco Systems, Inc. (NASDAQ:CSCO) opted for making such a move because their main business, that of networking components, is becoming tougher for companies to afford. Instead, these companies are looking for cheaper solutions for their networking and data needs.

The company, however, has said that it is not looking to compete with Amazon. It is more interested in catering to the services necessitated by many large companies and also, government sectors.

Cisco is planning to sell their cloud services to telecommunication companies who can further sell services as package data. Telstra Corporation of Australia, who happens to be Cisco’s partner in Australia, will be using these cloud services. Likewise, Canada’s Allstream Inc. will use these services.

Cisco does provide products that are used in data centers, and this will benefit the company as it aims to enter cloud services. It is also attempting to get its products compatible with software from notable companies like Microsoft Corporation (NASDAQ:MSFT), VMware, Inc. (NYSE:VMW) and  SAP AG (ADR) (NYSE:SAP)

Cisco Systems, Inc. (NASDAQ:CSCO) is expected to talk more on the new venture later.