Late last year, on October 25th, the United States Department of Defence announced that they would award a contract worth $10 billion dollars – the Joint Enterprise Defence Infrastructure project, henceforth referred to as JEDI – to Microsoft’s cloud computing business – the Microsoft Azure.
In the larger picture, the JEDI contract is but a small drop in the ocean of public contracts. According to the United States themselves, the federal government spends roughly $500 billion dollars on contracts every year. At face value, it was just another story of a tech-related government contract being awarded to the company with the most competitive bid.
But Amazon would contest the decision soon after, claiming errors in the process and political interference by President Trump. Like Microsoft, Amazon Web Services (AWS) – a subsidiary that provides cloud computing services – was in the run for the JEDI contract, and was even considered to be a frontrunner. By February of this year, Microsoft’s work had been halted, and the Pentagon was reconsidering the decision, as shown by court documents.
Though this story has taken an acrimonious turn, pitting Amazon against the Executive Branch of the United States with allegations of political interference, the competition between Microsoft and Amazon is not unlike that of any other two companies fighting for market dominance. The reason why President Trump allegedly interfered with the process is because cloud computing is a nascent, rapidly growing field that both companies – Microsoft and Amazon – have deemed crucial in strategic terms. So, he hit Amazon and its founder, with whom he has had public spats in the past, where it hurt.
Ultimately, this begets the question:
What is cloud computing, and why are the stakes so high?
Cloud computing is the delivery of computing services such as servers, databases, storage, software and analytics through the internet (the cloud = the internet).
Cloud computing services offer several benefits to clients:
No capital expenditures – You don’t have to buy your own physical assets, you rent them via the “cloud” instead. Like retail chains that started to lease and rent property instead of buying it.
Scale & Flexibility – The cost of the rent is proportional to the size of the business and traffic and it is very easy to increase your capacity. In other words, as your computing power needs increase with business and traffic, you are unconstrained by current equipment.
Speed & Performance – Your only limitation is your internet connection. Cloud services run on the latest high-tech hardware, so you are not limited by outdated hardware and you don’t have to constantly update your devices.
Security and Reliability – Cloud computing services come with automatic backups and disaster recovery, as your data is in many places instead of a single server. Cloud service providers also come with the latest network security methodologies, which would be too expensive for a single business to implement on its own.
These services can be split into three types:
Infrastructure as a service (IaaS) – the most basic version where you rent IT infrastructure such as servers for storage.
Platform as a service (PaaS) – Services that supply on demand environment for developing and testing software applications, such as mobile apps.
Software as a service (SaaS) – delivery of software over the internet, on demand, often requiring only a terminal (no need for installation).
Cloud computing has provided a unique benefit to society in general – it makes it much easier to launch a tech start-up, as the start-up costs are almost non-existent when compared to the 90s. Cloud computing was a major enabler in the tech boom of the last decade.
Amazon was the first of the two to launch their cloud computing business via AWS, back in 2006. The story of AWS is interesting. Initially, before 2006, what would become AWS was a private cloud system within Amazon to support data collection and server management across the entire company. Only after using and developing AWS for four years before offering AWS to the market. AWS was not planned and was born of Amazon’s culture of innovation and experimentation.
Microsoft would follow suit in 2010, at the time launching “Windows Azure”.
Today, these companies take up 70% of the market share valued at 227 billion dollars in 2019 (with Amazon being the market leader at 40%).
And seamlessly, without us ever noticing, they power many of the platforms and companies that we use in our day-to-day.
Consider Netflix, one of AWS’ high profile clients. In 2009, they opted to migrate from their physical data centre to the cloud, moving thousands of terabytes of data into Amazon owned servers, data that has to be accessed tens of thousands of times per second by 160+ million subscribers in all parts of the world.
Alternatively, consider HP, one of Microsoft Azure’s high-profile clients. According to HP, they handle more than 600 million technical support contacts each year. The accumulated data points for each of these contacts was used to build an AI assistant via one of the solutions provided by Microsoft Azure.
Either of these examples illustrate different services provided under the same umbrella term of “cloud computing”. Both cloud computing platforms ultimately aim to help businesses develop and meet their organizational goals: they offer many tools and frameworks to build an «on your own terms» platform.
But how would a manager choose between them? If a company already works with a platform, why consider getting a service from a competitor?
Part of the answer lies on the many different services they supply, as well as the current data infrastructure of the company in question. Microsoft is ubiquitous to any company in the world, but AWS seems to be more advanced in the cloud computing game as of right now (hence its frontrunner status in the JEDI contract). Regardless, none of the cloud suppliers offer the same service in the exact same way, or with the same value proposition. For a manager, choosing between AWS and Azure might be a balancing act, and they might end up using both.
Ultimately, the Cloud consumes our day-to-day lives. From the political contrivances as seen in the JEDI contract to the shift in paradigm that directly affects decision-makers, both high and low in a company, articles much like these are but a warning sign of a braver new world to come.
Sources: US Department of Defence, US Datalab, NY Times, Gartner, Microsoft Azure, AWS, Wikipedia