Microsoft Strikes Down AWS With ‘Big’ JEDI Win

Source:-sdxcentral.com

The Department of Defense (DoD) awarded its contentious Joint Enterprise Defense Infrastructure (JEDI) cloud contract to Microsoft, which was a surprise victory over larger cloud rival Amazon Web Services (AWS).

The contract is reportedly worth $10 billion over a 10-year period. In the DoD announcement, the government agency cites the “enterprise general-purpose cloud contract” as an initial two-year deal and $1 million in guarantees. It did add that it expects current projects and adoption will account for approximately $210 million in spending during that initial period.

“This contract will address critical and urgent unmet warfighter requirements for modern cloud infrastructure at all three classification levels delivered out to the tactical edge,” the DoD noted in its statement.

The DoD noted that the process has cleared reviews by the government’s General Accounting Office (GAO) and Court of Federal Claims.

Microsoft Vs AWS

Microsoft scoring the deal is seen as a huge upset. AWS for most of the past two years had been viewed as the most likely candidate to win the all-in deal, though recent political rumblings had opened the door to another candidate.

Those rumblings included a Pentagon inspector general investigation into potential “misconduct” related to the contract process and a very public feud between President Donald Trump and Amazon CEO Jeff Bezos.

“From the looks of it, the DoD process looked unstructured and was full of fits and starts … almost political,” noted Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, in an email to SDxCentral.

Through all of that, Microsoft had quietly been bolstering its position, including plans to build a pair of new Azure Government Secret data centers.

However, not everyone at Microsoft was thrilled with the company’s efforts as a number of Microsoft employees posted a letter protesting the move. The company did offer alternative employment options to employees that opposed the bid.

Those concerns pushed Google to not bid on the contract, stating that it couldn’t be sure that JEDI would align with its AI principles. It also conceded that certain aspects of the contract were not within the scope of Google’s government certifications.

‘Big’ JEDI Win for Microsoft

Moorhead said that the win was “big” for Microsoft “as most of its cloud sales comes from [software-as-a-service] services like Office and Dynamics 365 versus [infrastructure-as-a-service], which I believe will be a major part of the JEDI contract.” He also noted that Microsoft might be able to “leverage this into more government contracts and even into regulated industries where security is paramount.”

While big for Microsoft, Moorhead said AWS’ biggest loss in the deal is its public perception.

“Other than a very public loss, financially it means nothing,” Moorhead wrote, explaining that the $1 billion average benefit per year from the deal pales in comparison to AWS’ current $36 billion cloud run-rate. “AWS needs to go in and fight for all its U.S. government contracts as the JEDI win could open it up to rethinking services. I believe AWS is still larger in IaaS than the top 10 vendors combined.”

Both companies last week reported their latest financial and operational results that showed their respective cloud business coming in short of bullish expectations.

Synergy Research Group noted that both vendors are likely to see an increase in their respective market shares coming out of the most recent quarter. John Dinsdale, chief analyst and research director at SRG, predicts Amazon will move to around 33.5% share and Microsoft to around 16.5% market share.

Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x