If Amazon Beats IBM For CIA Cloud Deal, It Could Shake Up A Whole New Market

Andy Jassy, Amazon

As Amazon and IBM duke it out over a $600 million, 10-year cloud computing contract with the CIA, Amazon is aggressively courting other government customers. 

Neither Amazon, IBM nor the CIA have confirmed that the contract exists.

But on Tuesday, a top exec for Amazon’s cloud business, known as Amazon Web Services, didn’t downplay the importance of landing big government agency contracts. 

“The federal government opportunity is enormous,” Adam Selipsky, an AWS VP, told The Wall Street Journal’s Spencer Ante. “We believe that will be a very significant business for Amazon Web Services going forward.”

Amazon and the CIA inked the cloud contract in March, as first reported by Frank Konkel at Federal Computer Week. IBM, which also bid on the contract, is trying to convince the government to block the deal. 

Amazon doesn’t talk much about its cloud business, so the timing of Selipsky’s comments could be taken as a warning shot to IBM and other enterprise tech vendors. 

If Amazon prevails over IBM, it could gain access to a new market where it hasn’t played before.  

AWS is the leader in “public cloud” services, where customers rent access to servers and storage and apps running in Amazon data centres.

But the CIA  is said to want a “private cloud”—which usually means hardware and software that runs in an company’s own data centre. Enterprises prefer this because they’re afraid of putting their data in someone else’s data centre. 

The thing is, Amazon doesn’t sell private clouds. Companies that want private clouds that work with AWS can get them from Eucalyptus Systems, its business partner. 

So if the CIA picks Amazon to build its private cloud, that would give IBM and other private cloud vendors like Microsoft, HP, VMware and Citrix, a formidable new competitor that is already wreaking havoc on their businesses. 

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.