In its blistering filing challenging the award of a $10 billion Pentagon agreement to Microsoft Corp., Amazon.com Inc. claims the software giant was so “shocked” about winning the award that it took almost a day to comment on the success.
At the point when Amazon AMZN, +0.03% documented its appeal to the decision Monday morning, it set aside about a large portion of the effort for Microsoft MSFT, +0.84% to give a response statement, which showed up Monday night.
“We have confidence in the qualified staff at the Department of Defense, and we believe the facts will show they ran a detailed, thorough and fair process in determining the needs of the warfighter were best met by Microsoft,” the company said in an email to MarketWatch. “We’ve worked hard to continually innovate over the past two years to create better, differentiated offerings for our customers.”
At the point when the JEDI obtainment process started in late 2017, Azure would have had minimal opportunity to win. In any case, as the procedure extended after some time – postponed in huge part by a change in Defense secretaries – Microsoft had the option to play catch-up and make improvements to its product. By mid-2019, it had made critical steps to its hybrid cloud offering, separating it from AWS.
On Saturday, Microsoft President Brad Smith told CNBC, “We were working every day before we won that contract to make the product better. We have if anything been moving even faster since that contract was awarded.”
Amazon, however, says in its filing that Microsoft’s product is as yet inferior, particularly in security, and won uniquely through a series of missteps.
“Any meaningful review of that decision reveals egregious errors on nearly every evaluation factor, from ignoring the unique strengths of AWS’s proposal to overlooking clear failures in Microsoft’s proposal to meet JEDI’s technical requirements, to deviating altogether from DoD’s own evaluation criteria to give a false sense of parity between the two offerors (sic),” the filing says. “These fundamental errors alone require reversal.”
Such is the stark difference in approach nearer from the cloud market’s two greatest players. Amazon, with nearly half of the $32.4 billion infrastructure-as-a service markets, has come out swinging with a stinging 103-page lawsuit, and a highly-publicized speech by Chief Executive Jeff Bezos lauding the ideals of the military – strong activities that it won’t surrender its advantage to market upstart Microsoft.
Microsoft has deftly counterpunched by adhering to firmly scripted comments and avoiding a monstrous debate between AWS and the government. Why be pulled in between a combative president and an organization managing its very own few disputable issues (working conditions of laborers, no government taxes paid, a federal investigation of its business practices)?
Microsoft is a distant No. 2 in cloud computing however is really playing from a position of strength. It appreciates a huge installed base all through federal, state, and local governments through its Windows operating system and efficiency software. It’s the type of on-site presence that enables it to grow its services to the computing cloud – similarly, as it’s finished with its Teams collaborative-communications tool to catch up and pass Slack Technologies Inc. WORK, +2.34%.
The filing is sprinkled with arguments that AWS considers its technology better than Microsoft’s technology. Yet, presently it must demonstrate that case publicly, a tall order.
“In terms of the inferiority of the products, I believe the challenge is whether or not Microsoft can successfully support the requirements of the contract,” Daniel Newman, principal analyst at Futurum Research, told MarketWatch. “Being ‘superior’ has never guaranteed the award of a contract. It’s about meeting the capabilities and pricing requirements, among other things.”
“Microsoft tends to stay more conservative and distances itself from the type of competitive shots that some tech companies and their leaders sometimes get involved in,” Newman said.
The symbolism of the JEDI contract can’t be exaggerated. It’s not simply the biggest government prize for cloud merchants, however, investigators trust it could impact businesses making their own cloud decisions, particularly those considered “half and half” and multi-cloud methodologies – the type of installations where Microsoft and Alphabet Inc’s. GOOGL, – 0.12% GOOG, – 0.18% Google are making inroads.
The suggestions can be extensive and expensive to Amazon, Wedbush Securities expert Daniel Ives and others argue.
“In our opinion, this is a game-changer for Microsoft as this/JEDI will have a ripple effect for the company’s cloud business for years to come and speaks to a new chapter of Redmond winning in the cloud vs. Amazon in our opinion on the next $1 trillion of cloud spending expected to happen over the next decade,” Ives said in a Monday note that maintains an Outperform rating on Microsoft shares and price target of $170.
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