At the recent AWS Reinvent Conference, Andy Jassy, the high priest in charge of Amazon Web Services, continued to extol the virtues of cloud computing to his faithful, as one would expect. His focus remained purely centered on public cloud, where services are provided from Amazon’s own data centers and customers can be segmented virtually with software – this despite the fact that Amazon had just been awarded a 10-year, $600 million contract to provide the CIA with a private, dedicated data center running an AWS cloud solution just for them. IBM, with the only other bid submitted, came in with a lower price than Amazon, but Amazon still won. So while Jassy claims that private clouds offer “none of the benefits” of the AWS public cloud offering, a private cloud is exactly what he just agreed to deliver. Some things about this are easy to understand. It makes sense the CIA would insist on physically separate infrastructure. For one thing, our security agencies will all need huge capacity to sift through the ever-growing mountains of private information they seem to be collecting. It makes sense that Amazon would want to add the CIA to its customer list, since security concerns are a leading barrier to cloud service adoption, and who would care more about security than the CIA? It makes sense that the CIA would want cloud functionality to handle workloads that can vary tremendously as specific cases are opened and closed and as unpredictable events occur around the world. It even makes sense that they might not go with the lowest bidder if what they really wanted was a public-cloud-like solution, but in a big box all their own.
That said, one has to question the CIA’s wisdom in signing a 10-year deal for services in a market that is changing so rapidly, and one wonders if an RFP process that resulted in only two bids could have been handled better (sourcing advisory anyone?). But the real question is this: How is Amazon now winning business that they are ostensibly reluctant to even compete for? According to Jassy, “We will meet enterprises where they are now, but we will make it simple to transition to where the future workloads will be, in the cloud.” Pragmatically, this means that Amazon gladly will accept a customer’s money for private cloud now, with the goal of converting the heretics to the true public cloud path when the time is right. It will be very interesting to see how AWS does with the CIA. It’s unlikely they will feel much pressure to pass on the same kind of periodic price reductions as in the public cloud market, but only time will tell. Most importantly, if Amazon starts winning more deals like this one, the private cloud competition had better raise its game in a very big hurry.
