Microsoft Isn't Worried That Amazon's CIA Cloud Deal Could Threaten Its Turf

"Certainly, we see that [Amazon is] making inroads," Laura Ipsen, vice president of Microsoft's Worldwide Public Sector organization, said Tuesday in an interview at Microsoft's Worldwide Partner Conference. "I think competitors are going to come in and try things. Whether that scales, we'll see what happens."

In January, the CIA picked Amazon over IBM to build and operate a version of its "existing public cloud" that runs on the CIA's premises, according to a U.S. Government Accountability Office (GAO) report published last month.

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IBM filed a protest in February to block the Amazon-CIA deal. The GAO denied parts of it, but recommended that the CIA reexamine the bids. The agency is expected to decide early next month.

Amazon Web Services rules the roost in public cloud, and from the wording in the GAO report, it sounds like Amazon may be testing the private cloud waters.

There are a couple of reasons why Microsoft doesn't think this is a big deal. First, government agencies don't typically rely on a single vendor for their clouds.

Microsoft also sees its years of experience selling Windows Server, which organizations use to build private clouds, as something Amazon lacks. So even if Amazon is testing the private cloud waters, it's not like Microsoft isn't ready for the challenge.

"We just believe we have a solution now in cloud that works at scale," Ipsen said. "We have over a million servers, and we are very solidly in public, private and hybrid cloud." No one else is doing all three at the level of scale Microsoft has achieved, she said.

Still, landing the CIA cloud deal would have been a huge win for Microsoft, which was one of five vendors that submitted initial proposals for the CIA deal last July, according to the GAO report.

Ipsen declined to discuss the specifics of Microsoft's bid, saying only that "I think we had a very compelling bid in many respects."

The good news, Ipsen said, is that Microsoft has "a lot of ongoing work at the federal level" with the Department Of Defense and intelligence organizations.

Microsoft has built its cloud around regulatory requirements, which is another advantage, said Ipsen.

"This is a big competitive advantage for us, and an area where others are playing catch-up," she said. "We're the only company that makes our products HIPAA-compliant from a software and devices standpoint. Not even Apple does that."

PUBLISHED JULY 10, 2012

This story was updated on July 10, 2013, at 1 p.m. PST, to include information about IBM's February protest of the Amazon-CIA deal and the GAO's response.