Amazon, the e-commerce and cloud computing giant, is planning to use Microsoft’s 365 cloud productivity tools for more than one million of its employees, according to an internal document and a person familiar with the matter. The deal, which is worth over $1 billion, would mark a significant shift in the relationship between the two rivals, who compete in various domains such as cloud computing, e-commerce, artificial intelligence, and gaming.
Amazon currently uses a local version of Microsoft’s Office products, such as Word, Excel, and PowerPoint, but plans to move to the cloud-based 365 suite, which offers new AI capabilities and features such as Teams, OneDrive, SharePoint, and Power BI. The move is expected to start in November 2023 and finish in early 2024.
“This is a huge win for Microsoft and a sign of how the company has become a leader in cloud computing,” said Daniel Ives, an analyst at Wedbush Securities. “Microsoft 365 is the world’s productivity cloud, and we’re committed to delivering innovation across the platform that helps our customers achieve more,” said a Microsoft spokesperson.
The deal is part of Microsoft’s strategy to expand its cloud business and attract more customers from different industries and regions. Microsoft has been investing heavily in its cloud infrastructure and services, such as Azure, Dynamics 365, and Xbox Cloud Gaming. The company reported a 51% increase in its intelligent cloud revenue in the fourth quarter of fiscal year 2023, reaching $23.1 billion.
Amazon, on the other hand, is looking for ways to improve its productivity and collaboration tools for its employees, especially in the post-pandemic era. “We are always looking for ways to improve our productivity and collaboration tools for our employees, and we are exploring various options with different providers,” said an Amazon spokesperson.
The deal could also signal a new level of cooperation between the two companies, who have been engaged in fierce competition and legal battles over various issues. For instance, Amazon sued Microsoft over a $10 billion Pentagon cloud contract that was awarded to the latter in 2019. The lawsuit was dismissed by a federal judge in April 2023.
“This is a game-changer for both companies. It shows that they are willing to cooperate on some areas, even as they compete on others,” said Patrick Moorhead, an analyst at Moor Insights & Strategy. “This deal could set a precedent for other large enterprises to adopt Microsoft 365 as their preferred cloud solution,” said Rishi Jaluria, an analyst at D.A. Davidson & Co.
Relevant articles:
– Microsoft is preparing to bring on Amazon as a customer of its 365 cloud tools in a $1 billion megadeal, according to an internal document, Business Insider, October 17, 2023
– Report: Amazon will use Microsoft 365 cloud productivity tools in $1B ‘megadeal’, GeekWire, October 17, 2023
– Amazon Signs Up To Be a Billion-Dollar Microsoft 365 Customer: Report, Redmondmag.com, October 17, 2023