Amazon wins CIA cloud contract as IBM ends protest

IBM (IBM -0.2%) has withdrawn its protest of a $600M contract handed by the CIA to Amazon Web Services (AMZN +0.3%). The withdrawal, which follows a court ruling in Amazon's favor, clears the way for Amazon to build a private cloud infrastructure for the CIA in what's likely to serve as an important reference deal when competing for future enterprise/government contracts.

Amazon's "Other" North American sales, dominated by AWS, jumped 56% Y/Y in Q3 to $1.01B. However, much of AWS' growth thus far has come from Web/cloud service providers such as Dropbox, Pinterest, Netflix, and Salesforce's Heroku unit. While AWS has gradually been making enterprise inroads, it also faces strong competition here from IBM, Microsoft's Windows Azure, VMware's vCloud Hybrid, and Verizon Cloud, among others.

IBM scored a 10-year, $1B, cloud services deal from the Department of the Interior in August.

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Comments (7)
  • investingInvestor
    , contributor
    Comments (2578) | Send Message
    Amazon's AWS business line is BIGGER than the sum of its next 12 biggest competing public clouds. Amazon keeps dropping the AWS rates and adding new and better AWS support for customers/developers.


    All the public cloud providers risk being Amazon'd.


    Another day, another competitor Amazon'd.
    30 Oct 2013, 11:18 AM Reply Like
  • Momintn
    , contributor
    Comments (6116) | Send Message
    So why doesn't Amazon make any money? And why not say how much revenue they got from AWS? A direct question from Goldman got no answer. Other includes advertising and credit card revenue. IBM had $1B cloud revenue last quarter. And they don't lose money either.
    30 Oct 2013, 02:09 PM Reply Like
  • chrisgar
    , contributor
    Comments (97) | Send Message
    Amazon probably makes only small margins on public Cloud stuff. That is good for revenue -- not for margins. But they are setting the bar very high for other companies to compete on "commodity cloud storage services".


    30 Oct 2013, 02:36 PM Reply Like
  • JonBeGood
    , contributor
    Comments (294) | Send Message
    Unless Amazon is making a legitimate profit on providing web/cloud services then you basically have a case of ruinness competition. IBM prudently need not resort to desperate pricing measures to play this losing kind of game.
    30 Oct 2013, 05:59 PM Reply Like
  • Momintn
    , contributor
    Comments (6116) | Send Message
    You might want to read the entire article to see what really happened.


    "International Business Machines Corp. (IBM:US) abandoned its court fight with Inc. (AMZN:US) over a $600 million cloud computing contract for the U.S. Central Intelligence Agency, citing the government’s urgency to begin work on the project.


    IBM withdrew its bid for a stay of U.S. Court of Claims Judge Thomas Wheeler’s Oct. 8 ruling in favor of Amazon after the Justice Department said in court papers that further delay in resolving the contract would bring “harm to the United States” and create “significant challenges” for the CIA.


    Amazon sued the U.S. in July after the Government Accountability Office, the agency that makes recommendations on challenges to contracts, sided with IBM and agreed that the CIA had failed to properly evaluate prices and had waived a contract requirement only for Seattle-based Amazon.


    “In light of the government’s recent submissions emphasizing its need to move forward on the contract, IBM has withdrawn its motion,” Clint Roswell, an IBM spokesman, said in a statement. “IBM maintains its position that the GAO’s findings were appropriate.”


    Roswell declined to say what further action on the contract, if any, Armonk, New York-based IBM would pursue.


    Mary Osako, a spokeswoman for Amazon, didn’t immediately respond to a request for comment.


    The case is Amazon Web Services Inc. v. U.S., 13-cv-00506, U.S. Court of Federal Claims (Washington)."


    To contact the reporter on this story: Andrew Zajac in Washington at

    30 Oct 2013, 08:08 PM Reply Like
  • StreetRewards
    , contributor
    Comments (2) | Send Message
    Granddaddy built IBM at CALTECH during the 1950's. He was a High Level Military Clearance Physicist, Electrical and Systems Engineer at Motorola. A Jack Morton Symposium guy that transfered into JPL via Redstone. His invention of cellular military communications was presented in DC prior to his work on the first giant IBM Supercomputer. IBM appears to be failing at his clearance level in today's market.
    5 Nov 2013, 12:21 AM Reply Like
  • StreetRewards
    , contributor
    Comments (2) | Send Message
    Granddady, built IBM at CALTECH, after moving in from High Clearance Military work at Motorola. He was a Jack Morton Symposium guy from the beginning, a physicist, systems and electrical engineer. My experience on the street was clouded by IBM being at best the most informed group in Technology and at worst the closest to the dark money and shady business practices of the crash on the Street. Shame they can no longer keep their clearance, like GE, they both should divest terror.
    5 Nov 2013, 12:24 AM Reply Like
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