There was an upset in the nation’s capital on Friday evening. And It had nothing to do with the first baseball World Series game in Washington since 1933.
Instead, the Defense Department announced the winner of its huge $10 billion cloud computing contract. The winner: Microsoft. The software giant upset Amazon.com and its Amazon Web Services division to take the government cloud crown.
The “cloud” is a term referring to moving applications and data storage off local hardware and onto the web, so both can be accessed and analyzed by any device connected to the internet. And the U.S. government is getting into the cloud.
(By the way, you have to give the Pentagon points for creativity. The contract is called JEDI, short for Joint Enterprise Defense Infrastructure.)
“The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities to our women and men in uniform,” Dana Deasy, the chief information officer for the Department of Defensesaid in a statement. “The DoD Digital Modernization Strategy was created to support this imperative. This award is an important step in execution of the Digital Modernization Strategy.”
It is important for the tech giants, too.
The JEDI contract is “the biggest cloud deal for the space to date, a game-changer,” Wedbush analyst Dan Ives told Barron’s when Amazon.com (ticker: AMZN) and Microsoft (MSFT) were announced as contract finalists earlier this year. What’s more, the $10 billion figure represents the tip of the ice berg.
“Bezos and Nadella are both laser focused on this cloud opportunity in the DoD and other agencies to successfully capture what could cumulatively be a $100 billion cloud market opportunity over the coming years,” Ives wrote in a Friday research report.
The loss hurts, but Amazon as well as Oracle (ORCL), International Business Machines (IBM) and Dell Technologies (DELL) still have big government cloud opportunities, according to Ives. The importance of the cloud will continue to grow for big tech for years.
“Microsoft and Nadella are popping the Champagne tonight in Redmond, while Bezos and Amazon are likely shocked they lost the World Series of cloud deals,” Ives wrote.
Now, Washington National fans hope there are more Champagne corks to pop before the weekend’s out. Games 4 and 5 of the best-of-seven World Series are Saturday and Sunday nights. The Nats are up on the Astros, 2 games to 1.
Microsoft stock rose 2.4% the past week, better than the 0.7% gain of the Dow Jones Industrial Average. Amazon stock rose 0.2%. Both Amazon and Microsoft reported third-quarter results last week.
Write to Al Root at allen.root@dowjones.com
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October 26, 2019 at 09:17PM
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Microsoft Wins Defense Department Cloud Contract Over Amazon.com - Barron's
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