Microsoft Azure Defeats Amazon AWS for Coveted JEDI Contract

Photo by Simon Zhu on Unsplash


Microsoft was recently awarded a massive competitive contract with the United States Department of Defense, in particular the Joint Enterprise Defense Infrastructure, or JEDI contract, worth $10B USD over 10 years. The point of the JEDI contract is to provide cloud-based mission and operational support to the DoD, providing a cloud-based infrastructure for migrating and storing sensitive data. This contract has been on-going for a few years now and most industry insiders expected Amazon Web Services (AWS) to win.

It is my opinion that Amazon is likely going to challenge losing the contract, blaming political bias. Microsoft won the contract, and will win any challenge, on the merit of their offerings and response.

All politics aside, this matters to you as it continues to provide additional validation that Microsoft Azure has caught up to and surpassed AWS in many aspects of AWS, including security and scale, which the Pentagon just helped demonstrate. Further, we are going to see many more government agencies and government contracts adopt and train for Azure.

An Outsiders Take on the Process

When it comes down to it, this contract is not about the money. $10B USD does sound like a lot of money – let’s write that out, $10,000,000,000. Yes, that is a lot of zeros, but let’s break that down. Over 10 years, the simple math shows this contract is worth ~$1B per year or ~$250M USD per quarter. Again, large numbers, yet consider Microsoft’s quarterly revenue. Recently reported revenue showed $10.8B for Microsoft’s “Intelligent Cloud”, which includes Azure, Window Server, SQL Server, etc. Microsoft does not split out Azure revenue in a manner like Amazon.

For argument’s sake, can we say $5B of that revenue came from Azure related services? While difficult to validate, it seems reasonable to me. By my rough calculations, it is possible that the JEDI contract could increase/generate around 5% of Microsoft’s Azure revenue. Not bad, yet Microsoft is aiming for Azure growth in the 50%+ range.

Amazon recently reported AWS quarterly revenue in the $9B range for a similar time period, about 80% move over Microsoft. Thus, for Amazon, the JEDI contract would have been even smaller.

My point? This isn’t necessarily about money; it never was.

JEDI Contract Process

The history of the JEDI contract goes back quite a few years. The Department of Defense was looking to leverage cloud computing as it was finally coming of age. Thank you, AWS for making that happen for sure. The military was looking around at that time and noticed the biggest players, Amazon, Microsoft, Google, IBM, and Oracle, to name the biggest players.

At the time, it was obvious that AWS could provide the best solution. The other cloud providers saw such a contract as cheese at the end of the maze if they could in fact, beef up their cloud offering and make a competitive bid.

Over the next few years, the different cloud providers including IBM, Oracle, and Google were either disqualified, or – depending on your interpretation – bowed out because of social responsibility reasons, or they realized they couldn’t deliver anyhow.

Can we all admit it is a little funny that a company that had to drop their slogan, “Don’t be evil”, because well, they were unable to keep that promise dropped out of a contract because it conflicted with their AI principles? I digress.

A contract such as JEDI provides the bonafides to whoever won. In Amazon’s case, it would simply be another brick in the wall, another feather in the cap, that solidifies their solution as the most secure, feature-rich, and scalable cloud in the world. For a company such as Microsoft, a JEDI win is real. Azure is not only as good as AWS, it is in fact better than the established leader.

For those of us that have been in the Microsoft ecosystem for quite some time, this of course was nothing new. I, as well as many others, have been watching, supporting, utilizing, and promoting Azure as a superior offering for most use cases over AWS for some time now.

Although I admit thought the fix was in – this contract was AWS’s to lose – I am not at all surprised Azure was found to be the superior platform to meet the Department of Defense’s aims.

The fix was in

A few years ago, Amazon realized there is big money to be made in the government cloud computing space. If the DoD could be convinced to go with AWS, untold billions would flow in from other agencies and organizations that would be hard pressed to argue why a non-AWS solution was best for them when the military was utilizing AWS. Amazon set up shop (Amazon HQ2 + leadership residences) in the DC area, and became good “friends” with the US administration at the time.

Over the course for a few years of meetings and other arrangements, it was becoming clear to us outsiders that the JEDI contract was clearly written by and for Amazon. I have no doubt that Amazon would had won, except for one unexpected turn of events. The unexpected results of the 2016 US Presidential election. Amazon, and let’s face it, most of the world, expected a different outcome, and thus Amazon would win the contract without full consideration of the merits.

The Wildcard

When the presidential election was settled, all bets were off. It is no secret that the current administration does not like Amazon, and I believe the current administration ensured that Microsoft got a fair shake. Is it possible there was additional political pressure placed on this contract? Possible, yet it does not matter to me.

From my perspective, it gave Microsoft the  opportunity to finally complete on merits.

And win.

The JEDI Contract is far from settled

There is too much to lose for Amazon to let this go as a defeat. They have invested too much in DC and the government to simply walk away. There is also plenty of history of the current US administration throwing weight against those it does not like. My money is on Amazon contesting the award of the contract to Microsoft and a prolonged battle in the courts and beyond. The final outcome? Anyone’s bet.

My takeaway though? I admit my bias of course, though I see that Microsoft got a fair chance to win the JEDI contract and when stripped to its essence, Azure beat AWS fair and square. I have been and continue to support and recommend Azure for cloud services and this win will obviously add additional weight behind my words.

Congratulations to Microsoft and to everyone involved in winning the JEDI contract.

This article is the author’s take on recent developments in the cloud computing space and is based on his observations, opinions, and experiences over the past years while watching the drama play out.

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