Amazon Loses JEDI: Now What?
October 26, 2019
Friday (October 25, 2019) Amazon and the Bezos bulldozer drove into a granite erratic. The Department of Defense awarded the multi-year, multi-billion dollar contract for cloud services to Microsoft. “Microsoft Snags Hotly Contested $10 Billion Defense Contract, Beating Out Amazon” reported the collision between PowerPoint’s owner and the killing machine which has devastated retail.
CNBC reports:
If the Joint Enterprise Defense Infrastructure deal, known by the acronym JEDI, ends up being worth $10 billion, it would likely be a bigger deal to Microsoft than it would have been to Amazon. Microsoft does not disclose Azure revenue in dollar figures but it’s widely believed to have a smaller share of the market than Amazon, which received $9 billion in revenue from AWS in the third quarter.
The write up pointed out:
While Trump didn’t cite Amazon CEO Jeff Bezos by name at the time, the billionaire executive has been a constant source of frustration for the president. Bezos owns The Washington Post, which Trump regularly criticizes for its coverage of his administration. Trump also has gone after Amazon repeatedly on other fronts, such as claiming it does not pay its fair share of taxes and rips off the U.S. Post Office.
There are other twists and turns to the JEDI story, but I will leave it to you, gentle reader, to determine if the Oracle anti-Amazon campaign played a role.
There are some questions which I discussed with my DarkCyber team when we heard the news as a rather uneventful week in the technology world wound down. Let’s look at four of these and the “answers” my team floated as possibilities.
Question 1: Will this defeat alter Amazon’s strategy for policeware and intelware business?
Answer 1: No. Since 2007, Amazon has been grinding forward in the manner of the Bezos bulldozer with its flywheel spinning and its electricity sparking. As big as $10 billion is, Amazon has invested significant time and resources in policeware and intelware inventions like DeepLens, software like SageMaker, and infrastructure designed to deliver information that many US government agencies will want and for which many of the more than 60 badge-and-gun entities in the US government will pay. The existing sales team may be juggled as former Microsoft government sales professional Teresa Carlson wrestles with the question, “What next?” Failure turns on a bright spotlight. The DoD is just one, albeit deep pocket entity, of many US government agencies needing cloud services. And there is always next year which begins October 1, 2020.
Question 2: Has Amazon tuned its cloud services and functions to the needs of the Department of Defense?
Answer 2: No. Amazon offers services which meet the needs of numerous government agencies at the federal as well as local jurisdictional levels. In fact, there is one US government agency deals with more money than the DoD that is a potential ATM for Amazon. The Bezos bulldozer drivers may be uniquely positioned to deliver cloud services and investigative tools with the potential payout to Amazon larger than the JEDI deal.
Question 3: Does this defeat limit the growth opportunities of Amazon in general and AWS in particular?
Answer 3: No, Amazon has made significant sales in Australia and the UK to government agencies, both Five Eyes’ entities. This suggests that Amazon’s policeware and intelware services have markets outside the US. One need look to United Arab Emirates to see the opportunities for Amazon AWS. Plus, Microsoft’s cloud lacks some of the functionality which Amazon offers; for example, its managed blockchain services with Amazon’s assurance system and method, the Amazon streaming data marketplace, and the open source gateways “pull” clients into the AWS platform.
Question 4: What strengths does Amazon and AWS offer that Microsoft lacks?
Answer 4: Three. [1] AWS includes policeware and intelware services which are now in use in hundreds of US police departments. “Ring” up a plus for Amazon. [2] AWS has an education program operating which will provide a steady stream of salary-competitive, AWS-aware programmers, engineers, and specialists. [3] Amazon is operating a partner program which appears to be capable of revolutionizing the traditional approach implemented by Beltway contractors for more than half a century. Amazon reinvented retail; the company is trying to achieve the same success with integrators, certified professionals, and innovative co-operative programs.
Question 5: What must Amazon do to avoid losing new DoD contracts?
Answer 5: Three actions may be warranted: [1] Amazon may need to resolve the political tensions between Jeff Bezos and President Trump. Microsoft’s win may have more to do with this alleged tension than Microsoft’s technical superiority and the DoD’s addiction to PowerPoint. [2] Amazon may want to be more forthcoming about its understanding of the technical problems inherent in the Azure approach to cloud computing; for example, latency, inter process instability, and similar matters. The Bezos bulldozer is not equipped with a really smart Alexa to do this type of communicating. Amazon allowed Oracle to dictate public discourse about JEDI. [3] Amazon may have to reassess how it approaches US government, Five Eyes, and NATA country sales. Obviously the present method did not work in the JEDI procurement. It may be time for the bulldozer to visit a custom car specialist for some tuning and re-engineering.
Question 6: Is Amazon and Jeff Bezos up to change?
Answer 6: Amazon has been focused and purposeful since 1996. However, Amazon’s single-mindedness could be eroding. Furthermore the backlash against “Silicon Valley”-type companies, arrogant executives, and bad publicity about treatment of employees are warning signs. These issues may complement allegations that Amazon hired individuals to jiggle the procurement pinball machine. Change is difficult but that erratic granite block stopped the bulldozer.
To sum up, Microsoft wins JEDI. Amazon is not out of the game. But there are some flashing lights on the Amazon information superhighway.
Stephen E Arnold, October 26, 2019
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