Cisco Systems Inc plans to offer cloud computing services, pledging to spend $1 billion over the next two years to enter a market currently led by the world's biggest online retailer Amazon.com Inc, the Wall Street Journal reported.
Cisco (San Jose, CA, USA) said it will spend the amount to build data centers to help run the new service called Cisco Cloud Services, the Journal reported.
Cisco, which mainly deals in networking hardware, wants to take advantage of companies' desire to rent computing services rather than buying and maintaining their own machines.
Enterprise hardware spending is dwindling across the globe as companies cope with shrinking budgets, slowing or uncertain economies and a fundamental migration to cloud computing, which reduces demand for equipment by outsourcing data management and computing needs.
"Everybody is realizing the cloud can be a vehicle for achieving better economics (and) lower cost," the Journal quoted Rob Lloyd, Cisco's president of development and sales as saying.
"It does not mean that we're embarking on a strategy to go head-to-head with Amazon [Seattle, WA, USA]."
Microsoft Corp (Seattle, WA, USA) last year said it was cutting prices for hosting and processing customers' online data in an aggressive challenge to Amazon's lead in the growing business of cloud computing.
The company plans to discuss the new service Monday at a conference with its customers, the Journal said.
Cisco could not be immediately reached for comment by Reuters outside regular U.S. business hours.
(Reporting by Arnab Sen and Supriya Kurane in Bangalore; Editing by Gopakumar Warrier)