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Microsoft Wins $10bn U.S. Defense Department Contract, Beating Amazon

18 December 2019
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Microsoft wins $10bn U.S. Defense Department contract. In a confidence boosting move for Microsoft, the company has been awarded the U.S. Defense Department mega contract for public cloud resources, beating out the market leader Amazon Web Services. 

Announced by the Pentagon, the contract, known as JEDI, was awarded to Microsoft following a rigorous evaluation process, of which a Microsoft spokesperson said “For over 40 years, Microsoft has delivered innovative, proven and secure technologies to the US Department of Defense. We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DoD has chosen Microsoft.”

In a letter to CBNC, Microsoft stated “We are proud that we are an integral partner in DoD’s overall mission cloud strategy. As was articulated throughout the JEDI procurement, the DoD has a singular objective -- to deploy the most innovative and secure commercially available technology to satisfy the urgent and critical needs of today’s warfighters.”

A good day for Azure 

This is very good news to Microsoft users, justifying their choice to believe in Azure public cloud technologies over rivals, such as AWS (which is believed to own a greater share in the market). When the news was announced by Microsoft, the company’s stock increased by three percent, while Amazon’s fell a percentage point.

A big win for Satya Nadella

This could also be deemed a great win for Satya Nadella, Microsoft CEO, who, in a past life, ran the company’s Azure business. 

Since his appointment to head of the company in 2014, Nadella has targeted the Azure business and poured significant resources into it to ensure it grows, nurturing it into one of the business’s core elements here in 2019. Meanwhile, he has reduced focus on Windows, ensuring that as SAAS grows as a model, Microsoft is a leader in innovation in that space.

Winning a contract as valuable as JEDI, therefore, could arguably be seen as validation for Nadella’s strategy to focus on public cloud.

Controversial decision to award Microsoft $10bn?

Some commentators have declared that the decision to give the award to Microsoft over Amazon is political motivated. In the Pentagon’s announcement of the deal, it said “All (offers) were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed”. Whether this is true or not, the decision has now been made, and it is good news for users of Microsoft public cloud technologies.

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