The Microsoft JEDI Contract Gets Cancelled

The Six Five team discusses the cancellation of the Microsoft JEDI contract and what we can expect now.

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Daniel Newman: Let’s just talk about the fact that JEDI, the $10 billion contract that was awarded last year to Microsoft with a whole bunch of controversy around it has been basically blown up. They’re starting over, new name, new contract and totally new scenario. Pat, I’ll let you take this one.

Patrick Moorhead: Yeah, Daniel, this was rife with controversy. So think, two and a half years ago, this was awarded to Amazon. That probably means that they had been working on this or two years before that. So let’s just round that out to five years. If you look back five years ago, there really was only one, I would say credible vendor, for plan at scale IaaS and that was Amazon. So, I don’t think anybody was surprised when that happens, except of course for Oracle and Microsoft. What happened is they both filed lawsuits and then we can argue whether Trump was involved in this or not with Trump’s dislike of Bezos and The Washington Post, but what happened is it swung over then to Azure. Then over the time by which I would say the first JEDI was submitted and when it was moved over to Azure, Azure did become a credible plan at scale, IaaS player.

So, it was pretty smart of Azure to do that. They had to make a lot of investments. They had to build out a lot of different products. Microsoft does a lot of business with the federal government and the Department of Defense. If you look at the client-based solutions, i.e. PCs and things like that, it’s all Microsoft. So they had a very big footprint in there and there’s a lot of Microsoft on-prem infrastructure as well. So it totally made sense.

So now, yeah, like you said, there really isn’t a JEDI anymore. It was blown up and it’s called the JWCC, which is a great acronym, which I don’t know what the heck that actually means. But anyways, I expect Daniel, for this to also open itself up to likely players like Oracle. I think, if anything, this contract has gone multicloud and it’s funny, the big story might be that the JEDI got blown up. But I think the biggest story from my analyst’s perspective is multicloud and it’s funny for, I don’t know, 10 years, it’s like, if it’s not public cloud, it’s junk. Then when AWS introduced their on-prem capabilities with Outposts, nobody was debating the hybrid thing, but we were all still debating the multicloud thing. I totally get it, multicloud is hard. Essentially, if you want to go to two vendors and have multicloud, you have to have two different sets of people because there’s two different sets of processes to get in that. If you’re going to do it the right way, you have a data fabric that’s continuous, you have a security fabric, so you have single sign-on. So, multicloud is tough, but I think this is a big market indication, I think Daniel, that multicloud has arrived. I don’t think this was some political thing. I think multi-vendor and multicloud trumps the complexity of doing multicloud.

Daniel Newman: Yeah, it’s some solid analysis. Was I surprised about this being blown up? No. I have to say this thing has been awarded to both companies at a different point of time. You were absolutely right, rife with controversy. The Trump and Bezos contentious relationships, certainly put more questions than answers for anyone that was speculating on the deal. The time it took for the original award to take place certainly gave Azure a runway to meet the technical requirement and that is important, but I think you really hit it on the head. I think if you’re out there listening to this turn to make heads or tails of it, multicloud isn’t something that’s just going to be an enterprise solution. Multicloud, and by multicloud, we mean multiple public clouds, private clouds, we mean here’s going to be an on-prem component.

As companies realize that each public cloud provider has some certain unique services, data sovereignties, redundancies, geographics, there are different reasons to put different workloads in different clouds. So the bar is going to be set. This new contract, I believe is GWCC. It will be set, companies like you mentioned, Oracle, IBM, Google are all going to want to have a chance to participate and the bar will be more clear in this particular contract, so that those companies know how to participate. I will say that the overwhelming perception at this point is that it is a two-horse race today for this contract. But I do believe the workloads will be doled out, will be distributed. They will happen to largely go to Amazon and Microsoft during the first award. But I could see this having a very evolutionary component where the award could be shifted and changed and expanded. By the way, 10 billion, I think it gets bigger. I think it gets bigger because I think at one time that seemed really significant, but overall in the end, not as significant as cloud-scale for one of the world’s largest government entities. So good stuff here, interesting. A change, and something I think we ought to keep an eye on, Pat.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.


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