The Jedi Contract does not mean that the Rebels have won

Yes, Microsoft Azure won the $10B "Jedi" contract with the Department of Defense for PaaS (Platform as-a-Service) capabilities over the next TEN years. Yes, it's adding a $10B sales booking - if we assume it will be recognized ratably over the next decade it's adding a billion to the approximately $13.5B in 2019 revenue from Azure cloud each year. That is still a distant second from the $25B AWS generates a year.

Even growing at current rates, that means by the time Azure gets to the size AWS is today, AWS will be about a $54B business in 2 yrs. So the breathless prognostication and clickbait articles that this portends the demise of AWS are so overblown that it's downright irresponsible.

Just for some perspective, Slack and Lyft alone forecast spending more than $300MM over the next couple of years on AWS costs EACH. Apple itself is spending over $1.5B on AWS over the next few years.

From where we sit today, it appears the industry is headed towards a duopoly dominated by Amazon and Microsoft. It's ironic that Microsoft is seen as the Rebel and Amazon seen as the First Order given that much of the '90s and 2000's Microsoft was often labelled as the "Evil Empire".

But this level of competition is healthy for the industry. It will hopefully continue to drive down pricing and lead to more innovative capabilities as they evolve from basic IaaS capabilities to more value-added PaaS and full-fledged SaaS products. We're already seeing it with Amazon Connect and Azure's Cognitive Services.

My hope is that someday, as both companies compete to build the biggest "DeathStar" they can muster, some disruptive startup will come to challenge them in the next few years. But it won't be from Google, IBM or Oracle. Until then, may we all benefit from this healthy competition.

#AWS #Azure #CloudWars #JediContract