Pentagon asks court for time to reconsider JEDI award to Microsoft

The JEDI contract award process might never be done. Following legal challenges from Amazon after the Pentagon’s massive, $10 billion cloud contract was awarded to Microsoft in October, the Pentagon indicated in court documents last night that it wishes to reconsider the award.

It’s just the latest plot twist in an epic government procurement saga.

Here’s what we know. The Pentagon filing is based on Amazon’s complaints about the technical part of the deal only. Amazon has said that it believes political interference influenced the awarding of the contract. However, the cloud computing giant also believes it beat Microsoft on the technical merits in a majority of instances required in the request for proposals issued by the Pentagon.

In fact, sources told TechCrunch, “AWS’s protest identified evaluation errors, clear deficiencies and unmistakable bias in six of the eight evaluation factors.”

Obviously Amazon was happy to hear this news. “We are pleased that the DoD has acknowledged ‘substantial and legitimate’ issues that affected the JEDI award decision, and that corrective action is necessary,” a spokesperson stated.

“We look forward to complete, fair, and effective corrective action that fully insulates the re-evaluation from political influence and corrects the many issues affecting the initial flawed award.”

The court granted the Pentagon 120 days to review the results again, but indicated it could take longer. In the mean time, the project is at a standstill.

On Friday, the court issued a ruling that Amazon was likely to succeed on its complaint on merit, and that could have been the impetus of this latest action by the Pentagon.

 

While the political influence piece might not be overtly part of this filing, it does lurk in the background. The president has made it clear that he doesn’t like Amazon founder and CEO Jeff Bezos, who also owns the Washington Post. As we wrote last year:

Amazon, for instance, could point to Jim Mattis’ book where he wrote that the president told the then Defense Secretary to “screw Bezos out of that $10 billion contract.” Mattis says he refused, saying he would go by the book, but it certainly leaves the door open to a conflict question.

As we previously reported, AWS CEO Andy Jassy, stated at a press event at AWS re:Invent in December that the company believed there was political bias at play in the decision-making process.

“What I would say is that it’s fairly obvious that we feel pretty strongly that it was not adjudicated fairly,” he said. He added, “I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal.”

We have requested comment from Microsoft and DoD and will update the story should they respond.


By Ron Miller

Salesforce announces it’s moving Marketing Cloud to Microsoft Azure

In the world of enterprise software, there are often strange bedfellows. Just yesterday, Salesforce announced a significant partnership with AWS around the Cloud Information Model. This morning, it announced it was moving its Marketing Cloud to Microsoft Azure. That’s the way that enterprise partnerships shimmy and shake sometimes.

The companies also announced they were partnering around Microsoft Teams, integrating Teams with Salesforce Sales Cloud and Service Cloud.

Salesforce plans to move Marketing Cloud, which has been running in its own data centers, to Microsoft Azure in the coming months, although the exact migration plan timeline is not clear yet. This is a big deal for Microsoft, which competes fiercely with AWS for customers. AWS is the clear market leader in the space, but Microsoft has been a strong second for some time now, and bringing Salesforce on board as a customer is certainly a quality reference for the company.

Brent Leary, founder at CRM Essentials, who has been watching the market for many years, says the partnership says a lot about Microsoft’s approach to business today, and that it’s willing to partner broadly to achieve its goals. “I think the bigger news is that Salesforce chose to go deeper with Microsoft over Amazon, and that Microsoft doesn’t fear strengthening Salesforce at the potential expense of Dynamics 365 (its CRM tool), mainly because their biggest growth driver is Azure,” Leary told TechCrunch.

Microsoft and Salesforce have always had a complex relationship. In the Steve Ballmer era, they traded dueling lawsuits over their CRM products. Later, Satya Nadella kindled a friendship of sorts by appearing at Dreamforce in 2015. The relationship has ebbed and flowed since, but with this announcement, it appears the frenemies are closer to friends than enemies again.

Let’s not forget though, that it was just yesterday that Salesforce announced a partnership with AWS around the Cloud Information Model, one that competes directly with a different partnership between Adobe, Microsoft and SAP; or that just last year AWS announced a significant partnership with AWS around data integration.

These kinds of conflicting deals are confusing, but they show that in today’s connected cloud world, that companies who will compete hard with one another in one part of the market, may still be willing to partner in other parts when it makes sense for both parties and for customers. That appears to be the case with today’s announcement from these companies.


By Ron Miller

The 7 most important announcements from Microsoft Ignite

It’s Microsoft Ignite this week, the company’s premier event for IT professionals and decision-makers. But it’s not just about new tools for role-based access. Ignite is also very much a forward-looking conference that keeps the changing role of IT in mind. And while there isn’t a lot of consumer news at the event, the company does tend to make a few announcements for developers, as well.

This year’s Ignite was especially news-heavy. Ahead of the event, the company provided journalists and analysts with an 87-page document that lists all of the news items. If I counted correctly, there were about 175 separate announcements. Here are the top seven you really need to know about.

Azure Arc: you can now use Azure to manage resources anywhere, including on AWS and Google Cloud

What was announced: Microsoft was among the first of the big cloud vendors to bet big on hybrid deployments. With Arc, the company is taking this a step further. It will let enterprises use Azure to manage their resources across clouds — including those of competitors like AWS and Google Cloud. It’ll work for Windows and Linux Servers, as well as Kubernetes clusters, and also allows users to take some limited Azure data services with them to these platforms.

Why it matters: With Azure Stack, Microsoft already allowed businesses to bring many of Azure’s capabilities into their own data centers. But because it’s basically a local version of Azure, it only worked on a limited set of hardware. Arc doesn’t bring all of the Azure Services, but it gives enterprises a single platform to manage all of their resources across the large clouds and their own data centers. Virtually every major enterprise uses multiple clouds. Managing those environments is hard. So if that’s the case, Microsoft is essentially saying, let’s give them a tool to do so — and keep them in the Azure ecosystem. In many ways, that’s similar to Google’s Anthos, yet with an obvious Microsoft flavor, less reliance on Kubernetes and without the managed services piece.

Microsoft launches Project Cortex, a knowledge network for your company

What was announced: Project Cortex creates a knowledge network for your company. It uses machine learning to analyze all of the documents and contracts in your various repositories — including those of third-party partners — and then surfaces them in Microsoft apps like Outlook, Teams and its Office apps when appropriate. It’s the company’s first new commercial service since the launch of Teams.

Why it matters: Enterprises these days generate tons of documents and data, but it’s often spread across numerous repositories and is hard to find. With this new knowledge network, the company aims to surface this information proactively, but it also looks at who the people are who work on them and tries to help you find the subject matter experts when you’re working on a document about a given subject, for example.

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Microsoft launched Endpoint Manager to modernize device management

What was announced: Microsoft is combining its ConfigMgr and Intune services that allow enterprises to manage the PCs, laptops, phones and tablets they issue to their employees under the Endpoint Manager brand. With that, it’s also launching a number of tools and recommendations to help companies modernize their deployment strategies. ConfigMgr users will now also get a license to Intune to allow them to move to cloud-based management.

Why it matters: In this world of BYOD, where every employee uses multiple devices, as well as constant attacks against employee machines, effectively managing these devices has become challenging for most IT departments. They often use a mix of different tools (ConfigMgr for PCs, for example, and Intune for cloud-based management of phones). Now, they can get a single view of their deployments with the Endpoint Manager, which Microsoft CEO Satya Nadella described as one of the most important announcements of the event, and ConfigMgr users will get an easy path to move to cloud-based device management thanks to the Intune license they now have access to.

Microsoft’s Chromium-based Edge browser gets new privacy features, will be generally available January 15

What was announced: Microsoft’s Chromium-based version of Edge will be generally available on January 15. The release candidate is available now. That’s the culmination of a lot of work from the Edge team, and, with today’s release, the company is also adding a number of new privacy features to Edge that, in combination with Bing, offers some capabilities that some of Microsoft’s rivals can’t yet match, thanks to its newly enhanced InPrivate browsing mode.

Why it matters: Browsers are interesting again. After years of focusing on speed, the new focus is now privacy, and that’s giving Microsoft a chance to gain users back from Chrome (though maybe not Firefox). At Ignite, Microsoft also stressed that Edge’s business users will get to benefit from a deep integration with its updated Bing engine, which can now surface business documents, too.

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You can now try Microsoft’s web-based version of Visual Studio

What was announced: At Build earlier this year, Microsoft announced that it would soon launch a web-based version of its Visual Studio development environment, based on the work it did on the free Visual Studio Code editor. This experience, with deep integrations into the Microsoft-owned GitHub, is now live in a preview.

Why it matters: Microsoft has long said that it wants to meet developers where they are. While Visual Studio Online isn’t likely to replace the desktop-based IDE for most developers, it’s an easy way for them to make quick changes to code that lives in GitHub, for example, without having to set up their IDE locally. As long as they have a browser, developers will be able to get their work done..

Microsoft launches Power Virtual Agents, its no-code bot builder

What was announced: Power Virtual Agents is Microsoft’s new no-code/low-code tool for building chatbots. It leverages a lot of Azure’s machine learning smarts to let you create a chatbot with the help of a visual interface. In case you outgrow that and want to get to the actual code, you can always do so, too.

Why it matters: Chatbots aren’t exactly at the top of the hype cycle, but they do have lots of legitimate uses. Microsoft argues that a lot of early efforts were hampered by the fact that the developers were far removed from the user. With a visual too, though, anybody can come in and build a chatbot — and a lot of those builders will have a far better understanding of what their users are looking for than a developer who is far removed from that business group.

Cortana wants to be your personal executive assistant and read your emails to you, too

What was announced: Cortana lives — and it now also has a male voice. But more importantly, Microsoft launched a few new focused Cortana-based experiences that show how the company is focusing on its voice assistant as a tool for productivity. In Outlook on iOS (with Android coming later), Cortana can now read you a summary of what’s in your inbox — and you can have a chat with it to flag emails, delete them or dictate answers. Cortana can now also send you a daily summary of your calendar appointments, important emails that need answers and suggest focus time for you to get actual work done that’s not email.

Why it matters: In this world of competing assistants, Microsoft is very much betting on productivity. Cortana didn’t work out as a consumer product, but the company believes there is a large (and lucrative) niche for an assistant that helps you get work done. Because Microsoft doesn’t have a lot of consumer data, but does have lots of data about your work, that’s probably a smart move.

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SAN FRANCISCO, CA – APRIL 02: Microsoft CEO Satya Nadella walks in front of the new Cortana logo as he delivers a keynote address during the 2014 Microsoft Build developer conference on April 2, 2014 in San Francisco, California (Photo by Justin Sullivan/Getty Images)

Bonus: Microsoft agrees with you and thinks meetings are broken — and often it’s the broken meeting room that makes meetings even harder. To battle this, the company today launched Managed Meeting Rooms, which for $50 per room/month lets you delegate to Microsoft the monitoring and management of the technical infrastructure of your meeting rooms.


By Frederic Lardinois

Nadella warns government conference not to betray user trust

Microsoft CEO Satya Nadella, delivering the keynote at the Microsoft Government Leaders Summit in Washington, DC today, had a message for attendees to maintain user trust in their tools technologies above all else.

He said it is essential to earn user trust, regardless of your business. “Now, of course, the power law here is all around trust because one of the keys for us, as providers of platforms and tools, trust is everything,” he said today. But he says it doesn’t stop with the platform providers like Microsoft. Institutions using those tools also have to keep trust top of mind or risk alienating their users.

“That means you need to also ensure that there is trust in the technology that you adopt, and the technology that you create, and that’s what’s going to really define the power law on this equation. If you have trust, you will have exponential benefit. If you erode trust it will exponentially decay,” he said.

He says Microsoft sees trust along three dimensions: privacy, security and ethical use of artificial intelligence. All of these come together in his view to build a basis of trust with your customers.

Nadella said he sees privacy as a human right, pure and simple, and it’s up to vendors to ensure that privacy or lose the trust of their customers. “The investments around data governance is what’s going to define whether you’re serious about privacy or not,” he said. For Microsoft, they look at how transparent they are about how they use the data, their terms of service, and how they use technology to ensure that’s being carried out at runtime.

He reiterated the call he made last year for a federal privacy law. With GDPR in Europe and California’s CCPA coming on line in January, he sees a centralized federal law as a way to streamline regulations for business.

As for security, as you might expect, he defined it in terms of how Microsoft was implementing it, but the message was clear that you needed security as part of your approach to trust, regardless of how you implement that. He asked several key questions of attendees.

“Cyber is the second area where we not only have to do our work, but you have to [ask], what’s your operational security posture, how have you thought about having the best security technology deployed across the entire chain, whether it’s on the application side, the infrastructure side or on the endpoint, side, and most importantly, around identity,” Nadella said.

The final piece, one which he said was just coming into play was how you use artificial intelligence ethically, a sensitive topic for a government audience, but one he wasn’t afraid to broach. “One of the things people say is, ‘Oh, this AI thing is so unexplainable, especially deep learning.’ But guess what, you created that deep learning [model]. In fact, the data on top of which you train the model, the parameters and the number of parameters you use — a lot of things are in your control. So we should not abdicate our responsibility when creating AI,” he said.

Whether Microsoft or the US government can adhere to these lofty goals is unclear, but Nadella was careful to outline them both for his company’s benefit and this particular audience. It’s up to both of them to follow through.


By Ron Miller

Satya Nadella looks to the future with edge computing

Speaking today at the Microsoft Government Leaders Summit in Washington DC, Microsoft CEO Satya Nadella made the case for edge computing, even while pushing the Azure cloud as what he called “the world’s computer.”

While Amazon, Google and other competitors may have something to say about that, marketing hype aside, many companies are still in the midst of transitioning to the cloud. Nadella says the future of computing could actually be at the edge where computing is done locally before data is then transferred to the cloud for AI and machine learning purposes. What goes around, comes around.

But as Nadella sees it, this is not going to be about either edge or cloud. It’s going to be the two technologies working in tandem. “Now, all this is being driven by this new tech paradigm that we describe as the intelligent cloud and the intelligent edge,” he said today.

He said that to truly understand the impact the edge is going to have on computing, you have to look at research, which predicts there will be 50 billion connected devices in the world by 2030, a number even he finds astonishing. “I mean this is pretty stunning. We think about a billion Windows machines or a couple of billion smartphones. This is 50 billion [devices], and that’s the scope,” he said.

The key here is that these 50 billion devices, whether you call them edge devices or the Internet of Things, will be generating tons of data. That means you will have to develop entirely new ways of thinking about how all this flows together. “The capacity at the edge, that ubiquity is going to be transformative in how we think about computation in any business process of ours,” he said. As we generate ever-increasing amounts of data, whether we are talking about public sector kinds of use case, or any business need, it’s going to be the fuel for artificial intelligence, and he sees the sheer amount of that data driving new AI use cases.

“Of course when you have that rich computational fabric, one of the things that you can do is create this new asset, which is data and AI. There is not going to be a single application, a single experience that you are going to build, that is not going to be driven by AI, and that means you have to really have the ability to reason over large amounts of data to create that AI,” he said.

Nadella would be more than happy to have his audience take care of all that using Microsoft products, whether Azure compute, database, AI tools or edge computers like the Data Box Edge it introduced in 2018. While Nadella is probably right about the future of computing, all of this could apply to any cloud, not just Microsoft.

As computing shifts to the edge, it’s going to have a profound impact on the way we think about technology in general, but it’s probably not going to involve being tied to a single vendor, regardless of how comprehensive their offerings may be.


By Ron Miller

In spite of slowing growth, Microsoft has been flexing its cloud muscles

When Microsoft reported its FY19, Q4 earnings last week, the numbers were mostly positive, but as we pointed out, Azure earnings growth has stalled. Productivity and business, which includes Office 365, has also mostly flattened out. But slowing growth is not always as bad as it may seem. In fact, it’s an inevitability that once you start to reach Microsoft’s market maturity, it gets harder to maintain large growth numbers.

That said, AWS launched the first cloud infrastructure service, Amazon Elastic Compute Cloud in August, 2006. Microsoft came much later to the cloud, launching Azure in February, 2010, but so were other established companies in Microsoft’s market share rearview. What did it do differently to achieve this success that the companies chasing it — Google, IBM and Oracle — failed to do? It’s a key question.

Let’s look at some numbers

For starters, let’s look at the most numbers for Productivity & Business Processes this year. This category includes all of its commercial and consumer SaaS products including Office 365 commercial and consumer, Dynamics 365, LinkedIn and others. The percentage growth started FY19 at 19% but ended at 14%

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When you look at just Office365 commercial earnings growth, it started at 36% and dropped down to 31% by Q4.


By Ron Miller

AT&T signs $2 billion cloud deal with Microsoft

While AWS leads the cloud infrastructure market by wide margin, Microsoft isn’t doing too badly, ensconced firmly in second place, the only other company with double-digit share. Today, it announced a big deal with AT&T that encompasses both Azure cloud and Office 365.

A person with knowledge of the contract pegged the combined deal at a tidy $2 billion, a nice feather in Microsoft’s cloud cap. According to a Microsoft blog post announcing the deal, AT&T has a goal to move most of its non-networking workloads to the public cloud by 2024, and Microsoft just got itself a big slice of that pie, surely one that rivals AWS, Google and IBM (which closed the $34 billion Red Hat deal last week) would dearly have loved to get.

As you would expect, Microsoft CEO Satya Nadella spoke of the deal in lofty terms around transformation and innovation. “Together, we will apply the power of Azure and Microsoft 365 to transform the way AT&T’s workforce collaborates and to shape the future of media and communications for people everywhere,” he said in a statement in the blog post announcement.

To that end, they are looking to collaborate on emerging technologies like 5G and believe that by combining Azure with AT&T’s 5G network, the two companies can help customers create new kinds of applications and solutions. As an example cited in the blog post, they could see using the speed of the 5G network combined with Azure AI-powered live voice translation to help first responders communicate with someone who speaks a different language instantaneously.

It’s worth noting that while this deal to bring Office 365 to AT&T’s 250,000 employees is a nice win, that part of the deal falls on the under the SaaS umbrella, so it won’t help with Microsoft’s cloud infrastructure marketshare. Still, any way you slice it, this is a big deal.


By Ron Miller

After 5 years, Microsoft CEO Satya Nadella has transformed more than the stock price

Five years ago today, Satya Nadella took over as CEO at Microsoft, and by most any measure has been wildly successful. It’s common to look at the stock price as the defining metric of Nadella’s tenure, but the stock price triumph has followed something more fundamental and harder to measure, how he changed the culture of the entire organization.

Nadella’s term at Microsoft has paralleled my own here at TechCrunch. I started in April of 2014, and in one of my first posts, I wrote about the difficulty of substantive change inside an organization the size of Microsoft. In those early moments of both of our tenures, I recognized a subtle shift was taking place, one towards service, something Microsoft hadn’t been exactly known for under his predecessors, Steve Ballmer and Bill Gates.

Microsoft’s five-year stock price journey under Satya Nadella. Stock chart: Yahoo Finance

But Nadella’s inauguration came at a time where technology itself was shifting, moving from a monolithic model where IT shopped mostly at one vendor, and they were a Microsoft shop or an Oracle shop or an IBM shop, buying a full stack of products, to one where they would subscribe to cloud services and choose the best of breed.

This was also happening agains the backdrop of the Consumerization of IT, where power was shifting from large administrative departments to users and teams. Nadella seemed to understand all of this.

The shift in strategy, as I wrote, probably began long before Nadella was handed the keys to the CEO office, but perhaps it took a different kind of leader like Nadella to turn that battleship that was Microsoft corporation. Every company has its own politics and biases and I’m sure Microsoft did as well, but Nadella seemed to manage those, reorganizing the company over time, and shifting priorities. It didn’t come without the pain of layoffs, including one in 2017 when thousands of employees people were let go. Long-time executives like COO Kevin Turner and head of Windows and devices, Terry Myerson, also left the company.

But Microsoft went from a company trying to compel customers to buy an all-Microsoft, all-the-time kind of approach to one that recognized it was important to work across platforms and to partner widely. To show how serious he was, a year after he started, Nadella set aside his differences with Marc Benioff and Salesforce, and appeared at Dreamforce, Salesforce’s massive customer conference. That was hugely symbolic given the two companies had engaged in dueling lawsuits over the years, but this was a new day at Microsoft and Nadella was out to prove it.

In a quote, I’ve come back to a number of times over the years, Nadella laid out his new vision of cooperation. While he was going to compete fiercely of course, he was also going cooperate where it made sense because customers demanded it, and under Nadella it was all about the customer.

“It is incumbent upon us, especially those of us who are platform vendors to partner broadly to solve real pain points our customers have,” Nadella said at the time. He wasn’t ceding markets, or failing to compete when it mattered, but he also recognized to make customers happy, he had to partner when it made sense.

Back in the days before Satya, partners and developers talked about a much more hostile environment where it was difficult to get things done, to get the resources they needed and the attitude was not one of cooperation, but almost hostility. That changed under Nadella and he should get credit for that.

That all matters, of course, because in the age of the cloud, Nadella’s Dreamforce quote is spot on. Customers expect vendors to cooperate. They expect open APIs. They expect the platform to be friendly to developers — and under Nadella’s leadership, all of this has happened.

The company has also paid closer to attention to issues like accessibility, with features such as real-time captions and the new Xbox adaptive controller. Microsoft has instituted programs under Nadella to use AI to improve accessibility, and he has also spoken frequently about responsible AI development.

Nadella has also led an aggressive acquisition strategy using his company’s cash to buy companies big and small. The splashiest acquisitions were LinkedIn for a whopping $26.2 billion in 2016 and Github for $7.5 billion last year, but there have been a host of much smaller purchases, most for well under a billion dollars, that have filled in holes around security, developer productivity, gaming and a wide variety of cloud services.

It exceedingly difficult to successfully navigate these kinds of broad cultural changes inside a large organization, and while it is probably still a work in progress, Nadella has been mostly effective to this point. The stock price has followed that broader change, but it is not the story here. The story is one of leadership and change management inside a large organization.


By Ron Miller