It's often said you have to spend money to make money, and if that's true, Cisco may make a fortune in the cloud space. That's because the networking guru is reportedly planning to invest a king's ransom -- $1 billion, to be precise -- over the course of the next two years building data centers that will help run a new service it's calling Cisco Cloud Services.

Cisco specializes in networking hardware, and while that remains profitable, the company is seeing a growing trend where businesses would rather rent computing services in place of buying and maintaining their own equipment, The Wall Street Journal reports.


Currently the biggest player in the cloud space is Amazon and its cloud business, Amazon Web Services (AWS). Analysts estimate that AWS generates at least $3 billion in annual revenue, so it's easy to see why Cisco would be willing to invest such a large sum getting into the cloud services space. However, if you talk to Cisco, the company will tell you it doesn't necessarily see itself taking on Amazon directly.

"It does not mean that we're embarking on a strategy to go head-to-head with Amazon," Rob Lloyd, Cisco president of development and sales, told WSJ.

Lloyd's reasoning is that Cisco will be taking a different approach than Amazon, such as selling its cloud services to telecom companies that will then bundle them in packages of Internet-based services they already offer.