Microsoft and Amazon square off, sorta, in a very Seattle rivalry |
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If Microsoft and Apple are old rivals, and Microsoft and Google bitter enemies, then Microsoft and Amazon.com are starting to look a lot like passive-aggressive neighbors.
After coexisting peacefully for the better part of 15 years on opposite sides of Lake Washington, the Seattle-area corporate giants are suddenly aiming for more of the same customers and markets, as each broadens its ambitions in search of bigger profits.
But true to their Seattle roots, they aren’t overtly competing as much as they are quietly moving onto patches of each other’s turf — in areas including cloud computing, digital books and executive hiring.
The major roles of Amazon and Microsoft in the regional economy make this a key trend to watch. At the very least, the growing overlap promises to create some awkward moments at Microsoft’s annual CEO Summit, where Amazon’s Jeff Bezos is a regular attendee. But in more meaningful ways, the competition could actually turn out well, by making the region a hub for technologies that both companies are working on, such as the emerging business of cloud computing.
The crossover also underscores the rise of Amazon as a major player in the technology industry, expanding from online retailing into many other corners of the digital world.
“I don’t view this as ‘competition vs. cooperation.’ There is plenty of business out there,” said Ed Lazowska, computer science professor at the University of Washington. “Users — customers — are going to prefer different approaches. What’s great for us, for our future as a tech region, is that Amazon.com has emerged as one of the nation’s great technology companies, and that two of the three big players in ‘cloud infrastructure services’ are headquartered here.” The third, Google, also has a major presence in the region.
Microsoft and Amazon do cooperate on some fronts. Microsoft CEO Steve Ballmer touted Amazon’s Kindle software for Windows PCs during his recent keynote address at the Consumer Electronics Show in Las Vegas. Amazon offers customers the option of running Windows Server on its cloud-computing system. And neither lists the other among its competitors in filings with the Securities and Exchange Commission.
But in some ways, it would be hard to see them as anything but competitors.
“Definitely,” said Sandeep Aggarwal, a former financial analyst at Microsoft who now covers Amazon, Microsoft and other tech firms for the Collins Stewart financial advisory firm. “If you look at the different products and services, they are increasingly competing with each other.”
It starts with cloud computing, the industry buzzword for digital storage and computing resources that are served up from remote data centers. Microsoft’s new Azure system will compete against established Amazon services such as Elastic Compute Cloud (EC2) and Simple Storage Service (S3). Microsoft this month began charging companies and developers for Azure access, marking the official launch of that service and the beginning of a new stage in the Redmond company’s effort to expand beyond its traditional PC legacy.
The UW’s Lazowska points out that Amazon and Microsoft have different approaches to cloud computing. Amazon appeals more to companies interested in general-purpose computing and storage infrastructure, with the ability to run a variety of software on top of that; Microsoft’s Azure tends to have more appeal as a platform for running cloud-based versions of applications made using Microsoft’s .NET software-development system, among others.
In addition to the companies competing in cloud computing, Amazon has been making a habit of hiring veteran Microsoft engineers and executives. The latest is Mike Nash, a longtime Windows vice president who is leaving Microsoft to work at Amazon. He follows in the footsteps of other Microsoft veterans, including Brian Valentine, senior vice president of Amazon’s e-commerce platform; data center guru James Hamilton; and computer security expert Steve Riley.
Then there’s the philosophical divide over e-reading. Although Amazon offers Kindle software for reading digital books on Windows PCs and other devices, the company’s bigger focus is its dedicated Kindle reader. Microsoft, on the other hand, is placing its e-reading bets on tried-and-true, multipurpose PCs (including slate-style derivatives), which just happen to be the Redmond company’s biggest source of profits.
“We have a device for reading,” Microsoft’s Ballmer told Reuters last fall, implicitly distancing the company from the Kindle. “It’s the most popular device in the world. It’s the PC.”
More subtle indications of the rivalry include Microsoft’s support of Barnes & Noble, the quintessential Amazon rival, dating back at least as far as a 2000 Microsoft-Barnes & Noble alliance on digital books. Whereas Amazon is a well-known proponent of Linux and other open-source software and services, Barnes & Noble has served as a case study, literally, for companies running Microsoft technology.
People who have worked at both Microsoft and Amazon say that technological divide may be one of the reasons the companies haven’t become closer partners, despite their geographic proximity. The different mindsets inside Amazon and Microsoft also appear to be playing a part.
“If you’re Amazon, you’re wondering what’s to gain (from partnering with Microsoft),” said Alex Castro, a veteran of both Amazon and Microsoft who is now the chief executive of Delve Networks, a Seattle-based video-content delivery company. “Amazon is so innovation-oriented, and they’re so willing to cut against the grain. Microsoft is in many ways the opposite. It’s a little more staid, more risk-averse. There’s a natural clash there between the cultures.”
Earlier: Microsoft makes list of Best Places to Work, Amazon doesn't
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