Microsoft in talks to sign on Amazon as customer in $1B cloud tools deal
reuters.com
reuters.com
> The e-commerce giant has committed the amount for over five years and to secure more than one million Microsoft 365 license seats, according to the report.
What’s the scope of the deal beyond Microsoft 365 and how much does each license cost? The numbers, based on a back-of-the-envelope-calculation [1], make it seem like Amazon couldn’t negotiate better rates for such high volumes because its stuck with having to deal with Microsoft.
[1]: 1 billion over five years is 200 million a year. With 1 million seats (keeping it at the lower bounds), it’s $200 per user per year, which is $16+ per user per month. Microsoft Business Premium is currently on sale for those who buy from its website at $19.8 per user per month (usually $22 a month).
Love it or hate it - it runs financing thus it runs the world.
Finance hands some calculation spreadsheet to someone else, who then rolls it up to a department head who then tells another analyst to modify what the previous guy did because head didn't like it and so and and so forth.
The people most likely to never have to work with excel are IC engineers. If you're a manager, you likely have to do budgeting which goes to HR which goes to ... you guessed it - finance.
And you have to remember you're in a business org. If you need to read an excel file once a year, you'll want a license because you're part of Amazon - I mean my god I have to go find a separate computer with an Office license?! No way, just give me a license.
If your company uses Office, then your employees typically have their employee accounts managed through Active Directory. Which means that every single employee gets their own licensed Office seat, even if they don’t touch anything in the Office beyond email and Teams.
B: For warehouse operations, not everyone needs to be a user in AD
C: The comment above said there are a million employees with 2-3 degrees of separation to finance in terms of exchanging spreadsheets, which is what I responded to.
Do you agree that every employee needs work email access and some sort of a user account (for managing their benefits, interacting with payroll systems, etc.)?
If yes, then sure, it can be technically accomplished without AD. However, AD is an extremely well-suited system for managing incredibly large swaths of work accounts. And what’s the other option, running two separate user account management systems in parallel? That’s an insane amount of overhead managing and making sure it actually works. On Amazon scale, it would be a ton of money spent with very questionable results. Things aren’t that simple, and AD is an extremely powerful tool that can handle quite a lot of really quirky and intense scenarios.
> there are a million employees with 2-3 degrees of separation to finance in terms of exchanging spreadsheets
Finance employees are far from the only ones needing tools like spreadsheets/powerpoint/etc. What do you think devs use for writing and sharing design docs? What about presentations (which are used by pretty much everyone working in the corporate)? What about email? Do you think warehousing doesn’t use those at all?
Office is just straight up a good overall deal. You pay for a seat and you get all the Office tools (word/excel/etc), Teams, AD, Outlook, Onedrive/Sharepoint, etc. If your user touches even one of those, it makes sense to just say screw it and get a license seat for everyone, even from just the overhead costs perspective.
I am not saying that MS Office is the end-all. My current place uses Google offerings instead, but the general idea is the same.
> And what’s the other option, running two separate user account management systems in parallel? That’s an insane amount of overhead managing and making sure it actually works.
I've seen a large bank with THREE user account management systems in parallel, and two email systems. And they weren't alone in this way of setting things up.
* IBM RACF, for stuff that touched the mainframe
* MS AD for corporate employees and branch managers, they got Exchange email and Office
* OpenLDAP and some opensource email system for everybody else
I'd still package all of office together. Maybe not excel on its own but I imagine office is already its own org inside Microsoft.
You are correct, it has been its own org for a long time.
I don’t see the decoupling from the rest of MSFT ever happening though. Working with some of the Office codebase and some adjacent ones years ago, it is so tightly coupled on a technical level to many other MSFT products, it is pretty much impossible to separate. At this point, I wouldn’t be surprised if someone told me that there is some level of Xbox code integration within Office, and I am only halfway joking here.
AD integration alone is so fundamental, without it the whole product starts falling apart. Hell, some of the code in SharePoint has hard dependencies on rather ancient Skype/Lync code, and some pieces of core functionality code are still hanging onto files that were last touched 10+ years ago. It was kind of a bittersweet feeling to have to edit a piece of code and reading comments, and then realizing that the most recent changes to it were submitted by your manager around a decade ago, back when they were just starting out their career as a software dev.
And let’s not even talk about Teams, which has its fangs set extremely deep all over Office products (and beyond).
It is also highly likely [1] that this is a very, very, bespoke deal and the user count is just an easy pricing model to use that the Amazon people can wrap their heads around and that Microsoft can recognize revenue from.
0 - https://www.microsoft.com/en-us/microsoft-365/enterprise/fro...
1 - source: I used to be involved in crafting and negotiating these sorts of deals, although a bit smaller ($100m-ish vs $1b) and I've never done business with Amazon or Microsoft.
But yea Amazon has a lot of employees. Idk what the tech/business/distribution center split is but I’m sure everyone is given at least a work email.
Some sort of included email account that could be combined with your Amazon prime membership. Like every prime member gets 5 family members. Email is still pretty sticky.
On the enterprise side they are already talking to a significant chunk of the total market for office productivity users.
Instead they went and started a movie studio, were in talks to acquire physical movie theaters and acquired a retail medical group (OneMedical).
Its a shame they didn't take it as seriously (i.e. smart acquisitions) when the number of players that could scale up such offerings is much smaller than the number of players that can make movies.
Amazon has people pay them for infrastructure and has no line of busines that seems like a conflict of interests. (Online retailing doesn't seem like one, for example).
https://finance.yahoo.com/amphtml/news/amazon-is-quietly-bui...
There is no pick-and-choose in the way advertising would be defined, like you suggest. Advertising is just that; content that has either been paid for another party to show, has received payment to show, or the analytics/tracking data used to influence buyers or is marketed to sellers and other companies. By your definition, google’s ads in search results and targeted in websites wouldn’t be advertising either, because you [paraphrasing] “asked for it”.
As you mention email is super sticky. I can't fathom an argument where OneMedical didn't get them more room for innovation than buying/building a solution to a problem that was solved in 2004.
(Sorry I don't have a more-thorough link, though just those three years tell the story themselves)
Lots of well built and managed systems were tossed out for short term discounts, locking people into a glorified version of Hotmail.
Doing that kind of thing is getting increasingly hard because of how hard reputation management has become and how much work it is.
Mostly its the Amazon studios budget for blockbusters (i.e. $500M for Lord of the Rings) and the bid for AMC theaters which they fortunately didn't do.
I would think Zoom would have been interesting.
Perhaps there were aspects where customers were running their email, etc. on Amazon servers and thus it'd be better to book the revenue as AWS marketshare or something.
https://aws.amazon.com/business-applications/productivity-ap...
There is an office suit, email, video conferencing, and a no-code platform. Though Word Docs does not sound like a strong competitor. It either works with MS Office or with Amazon-hosted Hancom ThinkFree. ThinkFree does not support some basic features like track changes and pivot tables:
https://workdocs.thinkfree.com/hc/en-us/articles/36000314703...
Makes the 0365 deal even weirder. Is it for Teams?
Here's the kicker: you can't reassign or remove shortcuts.
Amazon must really hate Chime if it wants to move to teams.
Meta, for example, consolidated to Workplace + Google, away from Dropbox, Microsoft, Apple, and others. They use AWS and Azure for some 50k desktops on demand and a few servers, but it mostly deploys to its own metal because it's way, way cheaper than AWS in most use-cases.
Not to mention that most of their most important (enterprise) customers are using it.
It’s nice to be able to casually chat with a customer if you are in a customer facing role. Which is basically the entirety of the aws sales and solution engineering.
I know some folks that do management in one of the FCs and they had went from Chime to Slack earlier in the year so I can’t wait to see the sudden dump from Chime to Slack to Teams…
I also did not dislike Chime when I worked at AWS. Turns out that I have never updated my Chime client from version 4. After I left, I got into a call with somebody at AWS and hoooo boy, what piece of crap the new client is.
The funny thing was people complaining about Chime's call quality and praising Slack's. It's exactly the same thing, Slack video call is a Chime SDK implementation.
I would've loved to read the 6-pager on that, because it's not immediately obvious to me.
(I can see some business/data people demanding MS Excel, and some business people live by Powerpoint unless banned or forced to use some simpler and less-familiar presentation tool. But that's not a million seats. And letting MS get a toehold with their suite risks really dumbing-down how your organization works and thinks.)
Oh, and forgot to mention the licensing fees paid every year. So will be over a billion in a few short years.