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Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) Set Differences Aside to Close $108M FAA Cloud Contract

Microsoft Corporation Nasdaq:msft

Microsoft Corporation and Amazon.com Inc. are rivals in the cloud space; yet, their rivalry doesn’t stop them from teaming up when billions of dollars are at stake. Breaking news has it that Microsoft’s Azure and Amazon’s AWS have teamed up to land a $108M cloud contract with the Federal Aviation Commission (FAA). Computer Sciences Corporation (CSC) thinks that their synergy would help the FAA achieve its goals put the winning team together.

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CSC says that the deal will have Microsoft and Amazon sharing $108M from the onset, but there was no mention on how the contract will be shared between the two firms. CSC also noted that the deal is a long-term contract that could be worth some $1 billion over the next 10 years.

Government goes to the cloud, Azure and AWS Win, IBM and GCP not found

IBM is usually considered a key player in the cloud space and Google seems to make the loudest noise in the cloud. Yet, clients know that Microsoft and Amazon are the leading players in the cloud space. This is evident in the latest contract, which was awarded to Azure and AWS to the exclusion of IBM. IBM is fast becoming a relic of an era long gone and it is doubtful that it can catch up with Microsoft and Amazon in the cloud space.

Greg Myers, vice president of Microsoft Federal says, “This builds nicely on our collective success in moving the FAA to the cloud on the productivity side with Office 365. As the agency now moves to a hybrid cloud environment and consolidates its data centers”.

Teresa Carlson, vice president of Worldwide Public Sector at Amazon says, With AWS’s security and compliance standards – like FedRAMP, ITAR and SRG – CSC will be able to rapidly enable FAA to realize the benefits of agility, cost savings, and flexibility.”

A marriage of convenience

It is no longer news that Microsoft and Amazon are the leading players in the tech space; yet, both firms are fighting to hold and maintain the top spot in the market. Market watchers believe that Amazon’s AWS will record more than $7B in sales next year but Azure is close on AWS’ heels. The Richmond giant has said that its cloud unit is a $6.3 billion business and that cloud revenue grew over 100% as Azure cloud usage doubles.

Last month, analysts at Cowen believe that the cloud war is between Amazon’s AWS and Microsoft’s Azure. John Blackledge of Cowen, however, posits that Amazon might be the winner.

He says “Across several key criteria, AWS was the highest-rated Public Cloud vendor as AWS ranked #1 in share of budget, avg. annual spend and expected spending growth and was a close #2 in overall usage (to Azure)”. It appears that both firms can set aside their differences and work together when serious money is at stake.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.