IBM Has Stopped Fighting Amazon’s $600 Million Cloud Deal With The CIA

Virginia Ginni Rometty

Flickr/Fortune
Live Media

IBM CEO Ginni
Rometty

Earlier this month, Amazon
officially won a court battle with IBM
over a cloud
computing project for the CIA worth up to $600 million.

IBM, which had put in a competitive bid, protested the
contract. It said it was going to appeal this court decision, too.
But a few days ago, IBM officially gave up the legal fight, reports
Federal Computer Week’s Frank Konkel.

From court documents we learned that Amazon’s bid was a
whopping $54 million higher than IBM’s, but the CIA said it chose
Amazon because it thought its tech was better.

This win for Amazon is a game-changer in the cloud
industry. It marks the first time Amazon will build a so-called
“private” cloud. That means Amazon’s cloud tech will be used only
by the CIA and not shared with other companies.

Amazon is the biggest “public” cloud player, where many
companies share the same computing equipment. Companies like IBM
compete with Amazon by saying that Amazon isn’t as reliable or
secure. The CIA contract proves that one of the world’s most
secretive agencies thinks otherwise.

But IBM
doesn’t have to lick its wounds much. It’s still winning a lot of
government business including a 10-year deal to build a cloud for
U.S. Department of the Interior worth
up to $1 billion.
  On the other hand, that DOI
contract was worth $10 billion, and several of the vendors that
won a piece of it use Amazon’s cloud
. So Amazon will
quietly nab some of that cash, too.

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

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.