There’s never been a better time to be inthe cloud business—even if you’re not Amazon.
Amazon Web Services has dominated cloud computingfor the past nine years.
But Google and Microsoft, both giants in thecloud market, are growing at a rapid pace.
Alphabet, Google’s parent, posted fourth-quarterearnings results revealing that Google Cloud generated $8.
9 billion in revenue for 2019, an impressive 53% growth from the previous year.
Microsoft’s cloud operation, Azure, grewby 62% in the last three months of 2019, faster than any other cloud provider.
To truly understand why tech giants are fightingover cloud computing, we have to look back to the executive retreat at Jeff bezos housein 2003.
The Amazon leadership team was asked to identifythe core strengths of the company.
One thing became abundantly clear: Its infrastructuresservices gave them a huge advantage over their competition.
It was at that point, without even fully articulatingit, that they started to formulate the idea of what AWS could be, and they began to wonderif they had an additional business providing infrastructure services to developers.
The operating system for the internet From there, a grander idea emerged: That acombination of infrastructure services and developer tools could become a pseudo-operatingsystem for the internet.
By isolating different parts of the infrastructure(compute power, storage, and database) as components to the operating system and havingdeveloper-friendly tools to manage them, it was possible to conceive of infrastructure(especially Amazon’s) as automated and standardized with web services that can call for more resources.
In 2004, the company’s first public acknowledgmentof AWS emerged in a blog post, hinting at the developments to come.
and the rest, asthey say, is history.
A few years later the company launched theirInfrastructure as a Service.
It took time for the idea to take hold, buttoday it’s a highly lucrative business.
AWS was first to market with a modern cloudinfrastructure service when it launched Amazon Elastic Compute Cloud in August, 2006.
Surprisingly, it took several years beforea competitor responded.
As such, they control a vast amount of marketshare, at least for now.
Rest assured, some very well-heeled competitorslike Microsoft, Google, IBM and others are gunning for them.
The Competition ArrivesTwo years after Amazon Web Services (AWS) had gone live with its Simple Storage Service, Ray Ozzie, Microsoft’s chief software architect, announced that the company planned to launchits own cloud computing service called Windows Azure.
Ozzie told the crowd, “It’s a transformationof our software and a transformation of our strategy.
” After the announcement, Microsoft began toroll out preview versions of its cloud services, and in February 2010, the Windows Azure Platformbecame commercially available.
Early reviews of the service were mixed, withmany analysts comparing Azure unfavorably with AWS.
However, Microsoft improved Azure dramaticallyover time.
It also added support for a wide variety ofprogramming languages, frameworks and operating systems, including Linux — something thatonce would have been unthinkable for a Microsoft product.
Recognizing that its cloud computing servicehad moved far beyond Windows, the company renamed Windows Azure as Microsoft Azure inApril 2014.
In the years since, Microsoft has continuedto expand its cloud capabilities, largely living up to Ozzie’s predictions at the initialannouncement in 2008.
It has also increased its support for opensource software, and today Azure is a reasonable choice even for enterprises that don’t runWindows servers.
Competing closely with AWS, , Microsoft Azureis one of the unquestioned cloud leaders – and some observers say it has a chance to be thetop cloud vendor, long term.
Competition heats upWith Azure’s rise as a very real threat, AWS showed no sign of backing down.
In April 2010, Amazon further expanded itsreach setting up a ‘region’ in Singapore with local data centres.
This was the first Asia-Pacific AWS region, providing better bandwidth and lower latency for their Asian customer base.
This expansion was continued in 2011 withthe Asia-Pacific Northeast region in Tokyo, Japan and 2012 with Asia-Pacific Southeastin Sydney, Australia.
In 2012, AWS also launched its ‘sa-east-1’region in Sao Paulo, Brazil – the first South American AWS region.
AWS now has over 20 availability zones worldwide, spread across the US, Europe and the Asia-Pacific region.
At the end of 2018, they even announced plansfor data centres in Cape Town, South Africa, putting them in every one of the world’scontinents except Antarctica.
AWS now has more than 100 services, providingeverything businesses need to work seamlessly in the cloud.
Best of all, they’re constantly developingnew services and features to keep their customers at the forefront of cloud computing.
AWS vs AzureAWS made waves when it was selected by CIA for a private cloud contract worth $600 millionin 2013.
Since then, AWS has been servicing all 17US defense intelligence agencies, which has been a huge reason also why AWS is the marketleader.
After 4 years of AWS dominance on governmentcontracts, there was a new opportunity in 2017.
Microsoft and everyone else could feel thatthis was their chance to dethrone AWS.
The contract was Pentagon’s Joint EnterpriseDefense Infrastructure or JEDI for short.
To understand why this could be the decideron who dominates the multi-billion field of cloud computing for years to come, we haveto understand what winning this contract means.
You see when Amazon’s won CIA contract, it wasn’t just one contract they had won, they had won every other major client too.
Because perception around AWS was that ifit’s good enough for the CIA, it’s good enough for everyone.
So thats why when In early 2018, the Pentagonreleased its proposal, a 10-year, $10 billion endeavor to modernize the military’s IToperations, it wasn’t just any other contract, it was an opportunity companies like azurewere long waiting for.
Although separate branches of the militaryand intelligence communities had been cutting their own cloud deals for years, the new proposaloutlined a unified IT approach for the entire Department of Defense, including classifiedand unclassified operations.
Notably, phase one language says the procurementwill be a “full and open competition, ” perhaps to squash rumors that the departmentplanned to issue competition-less contract.
This set off a showdown among Amazon, Microsoft, IBM, Oracle and Google for the right to transform the military’s cloud computing systems.
The acrimonious process involved intense lobbyingefforts and legal challenges among the rivals.
The Pentagon awarded the contract to Microsoftin late October 2019.
This was supposed to be Amazon’s contractto lose.
Amazon practically invented enterprise cloudcomputing 14 years ago with AWS.
When the Pentagon put out the requirementsfor the contract a year and a half ago, some competitors cried foul that it was too tailoredto Amazon.
But Amazon believes the decision wasn’tbased on merit but rather a personal vendetta.
As you probably have seen from your twitterfeed, President trump is not too fond of Amazon CEO Jeff Bezos.
Trump became publicly hostile to Mr.
Bezos, who also owns The Washington Post.
The president often refers to the newspaperas the “Amazon Washington Post” and has accused it of spreading “fake news.
” A speechwriter for former Defense SecretaryJim Mattis says in a book that Mr.
Trump had wanted to foil Amazon and give the contractto another company.
The award to Microsoft is likely to fuel suspicionsthat Mr.
Trump may have weighed in privately as well as publicly against Amazon.
Experts on federal contracting said it wouldbe highly improper for a president to intervene in the awarding of a contract.
Trump’s vocal criticism of Amazon hasgiven Amazon ample grounds to protest the award to Microsoft in federal court.
Judge has granted a temporary block on theJedi contract while the case is sorted out.
But if the previous decision is upheld, Microsoft’swin has implications for the cloud computing industry, in which businesses rent space ontechnology companies’ server computers, giving them cheap and fast access to storageand processing.
Amazon has long been the dominant player, with about 45 percent of the market, trailed by Microsoft with around 25 percent, saidDaniel Ives, an analyst for Wedbush Securities who has closely followed the JEDI saga.
Landing the JEDI contract puts Microsoft ina prime position to earn the roughly $40 billion that the federal government is expected tospend on cloud computing over the next several years.