Summary:

The spat over who builds the CIA’s stealth cloud is just the first of many battles as traditional IT companies seek to prove they’re relevant in cloud computing.

cia headquartersThe continuing cloud spat between Amazon Web Services and IBM over which gets to build a secure cloud for the CIA is worth way more than the $600 million contract itself.

The fight, which continued last week when AWS contested an IBM challenge to its winning bid, signals what many see as a changing of the guard from old-line legacy IT providers (IBM, HP, Microsoft, insert-your-favorite-legacy-player here) and newer, ostensibly leaner purveyors built from the ground up for cloud. That’s why I found it incredibly interesting that IBM’s WebSphere group is using Netflix AWS-oriented tools for some of its sample applications.

The AWS bid actually came in higher than IBM’s but the opening number is just the beginning — a way to get one’s foot in the door. IBM’s typical game plan is to get in and upsell more high-end services. And technologies like IBM’s Watson’s AI capability often come with sticker shock. Of course, AWS, which likes to be seen as the low-cost provider, is not always so low-cost either and it also loves to sell more and more stuff as it churns out dozens of new services every year. Startups and bigger companies alike say AWS is the way to get started on a deployment, but once it’s production ready, it’s can be cheaper to bring that app back in house.

As Timothy Jones, CEO of startup Buzzient told me a few months ago,  AWS can be a “honey pot…you can get in cheap but pretty soon it’s not very cheap at all.”  Of course, that’s a characterization that AWS would vigorously contest. Anyway, the CIA says it has addressed GAO concerns about how the contract was awarded but we still don’t know who the big winner is.

Amazon sets up (a big) shop in Cambridge

Kendall Square, Cambridge, Speaking of Amazon, the retail and web services giant is moving into Cambridge’s Kendall Square in a bigger-than-expected way,  Xconomy’s Curt Woodword reported Friday. The company has signed up for more than 129,000 square feet — room for more than 600 people.

In December, the Boston Globe’s Scott Kirsner reported that Amazon was in the hunt for engineers to staff a new Cambridge-area office. A quick glance at job postings shows that Amazon seeks a variety of software engineers — in speech technology and in mobile digital products at this facility, which will be cheek-to-jowl with Microsoft, Oracle, and an expanded Google presence in what has become a tech boomtown.

Tough week for Rackspace

Rackspace took it on the chin this week when Cloudscaling CTO Randy Bias criticized the company for its not providing AWS API compatibility in its OpenStack cloud implementations. Such compatibility, in Bias’ view, is essential to the success of the OpenStack open source cloud. Rackspace has said strict adherence to AWS APIs hinders innovation.

Structure 2012: Lew Moorman - IT Cloud Lead, Intel Corporation

Structure 2012: Lew Moorman.

The next day, Rackspace President Lew Moorman, told employees that he’s stepping back from that role to deal with health issues in his family. He will remain on the board of the San Antonio, Texas-based company.
 

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