Amazon is front-runner in huge Pentagon cloud-computing deal
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Amazon is front-runner in huge Pentagon cloud-computing deal

The U.S. Defense Department is still looking for the right cloud-computing company to take ownership of a multi-year, multi-billion, contract to host its enormous collection of data, including sensitive information. The upgrade will give senior officials and military leaders the ability to make data-driven decisions at maximum speed, and most of the big players are in the running: Amazon, Microsoft, and IBM. And while some observers have questioned the decision to use a single provider for JEDI (the Joint Enterprise Defense Infrastructure), officials are resolute that it’s the best option.

Amazon’s share price has appreciated by 60% so far this year

graph 1010 amazon

SOURCE: Yahoo Finance

While the race is far from over, Amazon is a clear front runner. At time of writing, the company has the highest levels of security clearance for its cloud infrastructure, and it won a $600 million contract with the Central Intelligence Agency in 2013. Amazon is also the largest U.S. cloud provider by some measure (it has 44.2% of the cloud infrastructure market, while Microsoft’s Azure is in second place with just 7.1%), which may give it an edge, given the size of the job.

According to Naomi Nix, who has been covering Project JEDI for Bloomberg, it will include “the transitioning at least some of the department’s technology needs -- including some 3.4 million users and 4 million devices -- to a commercial cloud.” That’s the kind of scope that favours the biggest player on the market, and it comes with an equivalent timeline and cost: $10 billion over 10 years.

Since Google pulled out of the race (another contract it held with the military drew criticism from employees), there are still 9 providers jostling to win JEDI. They are competing hard with targeted advertising. Whichever company wins will be in possession of one of the biggest contracts going.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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