Cisco inks cloud sales deal with Pivotal

SAN FRANCISCO (Reuters) - Cisco Systems Inc (NASDAQ: CSCO) has struck a deal with Pivotal Software Inc to offer each other's products in the cloud arena, a sign the giant network company is looking to work with others as it tries to build its presence in one of the fastest-growing areas of computing.

The agreement, to be announced later on Tuesday, means the two companies will jointly sell Pivotal Cloud Foundry, which helps developers build and run software on the cloud, and Cisco's Metapod, a service that lets companies make their data centers more cloud-friendly.

Pivotal's service helps companies deploy a free, but hard-to-use open-source technology also called Cloud Foundry, much as the free operating system known as Linux generally requires services of a consultant like Red Hat Inc.

Pivotal Cloud Foundry competes with services such as IBM's (NYSE: IBM) Bluemix and HP Enterprise's (NYSE: HPE) Helion, while Mirantis competes with Metapod.

The so-called cloud has become a broad term for quick delivery of data over the Internet, often by sharing computing resources with other companies.

As growth has slowed in Cisco's main business of switches and routers, in part due to customers turning to technology that relies more on software than hardware, it has looked for business in new areas such as the cloud, often through acquisitions.

It is unclear if Cisco will be able to expand its newer cloud-based offerings at a strong enough rate to make up for weaknesses in its core business.

In 2014, Cisco sold most of its stake in a collaboration to offer cloud hardware with EMC Corp (NYSE: EMC) and EMC's majority-owned virtualization company VMWare Inc (AMEX: VMN). EMC is also the majority owner of Pivotal, which spun out of the storage giant in 2013.

Before the recent turmoil on global stock markets, Pivotal was considered a strong candidate to hold an initial public offering this year.

(Reporting by Sarah McBride; Editing by Bill Rigby)

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