Racing Amazon for JEDI contract, Microsoft gives US intelligence a seat on its cloud
Microsoft just signed a deal to offer a new version of its cloud computing platform, called Azure Government, to 17 US intelligence agencies.
This is an expansion of their current contract, as part of their quest to win all the marbles: the Pentagon’s winner-takes-all Joint Enterprise Defense Infrastructure (JEDI) contract.
The Washington Post says Microsoft execs see the new contract as an “awakening” -- and they’re hoping the intelligence community will be “woke” enough to skip over frontrunner Amazon for the JEDI bid.
Heating up, the cloud wars are
The US government doled out $2.3B to cloud-computing partners in 2017, an amount expected to increase 20% annually through 2022 -- making cloud contracts a hot commodity for old-guard defense companies and tech giants alike.
And, the upcoming $10B JEDI contract is the largest in DoD history -- juicy enough to get Microsoft, Oracle, IBM, Amazon and 42 competitors to toss their clouds into the ring.
There will only be one last JEDI
While Microsoft has contracted for the DoD before (it signed a $927m, 5-year IT contract with them in 2016), it has only ever handled unclassified data. Amazon, which won a $600m CIA contract in 2013, is the only tech company to handle classified data on cloud servers.
Moreover, Amazon’s cloud tech dominates the digital sky with 44.2% market share (the next biggest are Microsoft’s at 7.1% and Google’s at 2.3%) -- giving it an advantage over its low-clearance competitors.
Keeping it classified does NOT mean keeping it classy
Since the DoD announced it would pick only 1 JEDI, competing clouds have warned of an unfair Amazon advantage.
In April, Oracle created a coalition with IBM and Microsoft to lobby Uncle Sam to split the deal into a multi-cloud contract and spread the wealth. Later, when the DoD awarded a $950m to an Amazon cloud partner, Oracle sued -- successfully downgrading the deal to $65m.
The government will likely announce the JEDI winner by September, and you can bet the contenders already have their lawsuits locked and loaded… unless they win, of course.
The DoD awakens
GE sells off its rail unit for $11B as it looks to fund a revamp
General Electric has agreed to sell its century-old railroad business to Wabtec for around $11B.
According to Axios, GE will receive $2B in cash and a 9.9% stake in the combined company, while shareholders will receive a 40.2% stake.
The Wall Street Journal reports that GE is currently in a major slump, with their stock down nearly 50% in the past year. But their new CEO, John Flannery, has promised a major “revamp” since taking the helm in August, and this is his first move in a major makeover.
Flannery’s comin’ in hot
In October, Flannery said there were “no sacred cows.”
AKA, he’s going to mercilessly cut business units that aren’t pulling their weight (GE’s freight locomotives division profits dropped 23% in 2017), so that the remaining divisions don’t have to fight for company resources.
He also pledged to sell at least $20B in assets and refocus the Boston-based manufacturer on key markets like aviation, healthcare, and energy.
And there’s gonna be more where that came from
The company is simultaneously in the midst of a strategic review that could result in other units being split or slashed -- and lead to a breakup of the conglomerate entirely.
In the meantime, Flannery has promised to update investors by the end of June with a full plan for GE’s key markets, as he aims to make the company a lean, mean, dividend-producing machine.
As profits fall, AstraZeneca shareholders revolt against CEO’s compensation
More than 37% of shareholders at the bio-pharma giant AstraZeneca voted against an $11m pay package for their CEO, Pascal Soriot.
After a 46% drop in operating profits in the first fiscal quarter of the year, shareholders didn’t think Soriot deserved a raise. So, they staged a so-called “shareholder revolt” -- a move that’s becoming increasingly common in an era of runaway executive salaries.
CEO pay is on the rise
CEO salaries used to be hush-hush, but last year the SEC mandated disclosure. Today, the average CEO makes 127x more than their typical employee (an 11-year high), and at most of the largest companies, that gap is increasing.
Now, shareholders are slowly starting to hold them accountable, voting against bosses who get rich when their companies don’t.
Key word: Slowly
Two months ago, Disney shareholders voted to reduce their CEO’s salary, citing an “absence of growth.” Like Soriot at AstraZeneca, Disney CEO Bob Iger had already received a hefty (17%) pay decrease the previous year -- but investors didn’t think it was enough.
In other cases, shareholders give the boss the boot when they screw up -- like Uber last year when investors tossed ex-CEO Travis Kalanick off his rideshare pirate ship.
But, though shareholder shouting has gotten louder, it still rarely makes a dent in CEO wallets -- in 2017, just 1.2% of S&P 500 companies succeeded in winning majority support to change executive payment.
This means war: Banks are going full bunker mode to fight cybercrime
The New York Times reports that, over the past few years, dozens of banks have opened what they call “fusion centers” — windowless, militarized bunkers to play defense against one of the world’s fastest-growing industries: cybercrime.
Mastercard reportedly receives a cyber ambush every 3 seconds, and according to a McAfee study, at least $445B was lost to sneaky cyber bandits last year.
“I’m going for more of a mid-century war room feel”
Banking giants like Citigroup and Wells Fargo took a page out of Homeland Security’s playbook, who set up fusion centers after 9/11 to help coordinate federal, state, and local intelligence gathering.
In these financial fusion centers, banks employ ex-military cyber commandos to riff on strategy and implement some of the very counterintelligence tactics they used in the service.
“Drop down and give me 10 encryption keys”
It’s not just the financial giants who are enlisting either. Cries of cyberwar have made it to smaller ponds as well, as some experts predict cyber damages could cost the world up to $6Tn annually by 2021.
Many regional players like Bank of the West have opened up fusion centers over the years as well, with many more following suit.
With these heavily secured intel bunkers, banks look to detect useful patterns in the mass amounts of data they’re receiving every day to protect us from cyber thieves.
Disclosure: Microsoft and General Electric are advertisers with The Hustle.
We’re bringing Lightning Talks back
Sure, it’s not as catchy as the JT song, but it’s just as exciting.
In 2014, our CEO Sam put on the first inaugural Hustle Con. It had skeeball, free cookies, and my personal favorite: Lightning Talks. 5-10 minute talks that were hyper-focused and extremely tactical.
This year we’re bringing ’em back. Here are 2 I’m excited about:
Jerry Hum, co-founder of Touch of Modern
Jerry Hum started Touch of Modern after noticing a massive hole in the market: retail that helps male consumers upgrade their lifestyles. Using data-driven decisions Touch of Modern now processes over a million orders a year and brought in $117m in revenue in 2017.
At Hustle Con, CEO Jerry Hum will explain how his team gathers customer insights and uses that data to drive growth and profitability.
Ethan Agarwal, founder of Aaptiv
Ethan had gained some weight (business school and consultant life will do that to you). So, he built the world-class, audio-based exercise app he wanted: Aaptiv. Today, Aaptiv has over 200k paid subscribers, $30m in funding, and 2,500 classes with 40 new classes added each week.
At Hustle Con, Ethan will explain the exact steps he took to take Aaptiv from a multimillion-dollar burn rate to profitability in under a year.
Feeling buzzed on business dev? We’ll be announcing more Lightning Talk speakers in the coming weeks, so stay tuned.
1. Using technology to be more efficient. 2. Using the word technology to sound more efficient. 3. Anything with Wi-Fi.
Marketer: We want to differentiate the SuperSlice6000 as the world’s first tech-enabled blender.
Marketer: Just give it an internet connection and call it a day.
Designer: Does it need internet?
Marketer: Does it matter?
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