AWS must partner with software companies to compete with Microsoft

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  • AWS has signed a new partnership with collaborative hot work startup Notion.
  • She also maintains a close partnership with Salesforce, which has deepened with the arrival of CEO Adam Selipsky.
  • Partnerships with startups and software companies could be a winning strategy for AWS to beat Microsoft.

As new CEO Adam Selipsky increasingly settles into his role as head of Amazon Web Services, there are growing signs that the cloud giant could mount an offensive against Microsoft’s dominance in productivity software.

But with a glaring lack of its own business applications – Amazon Chime’s video conferencing software has never hit the mainstream the same way its rivals – AWS has a gaping hole in its ability to compete. It’s even an issue that AWS itself recognizes internally, with regular discussions about how to match Microsoft, Insider reported.

This is perhaps one of the main reasons why Amazon quietly but steadily built a network of allies, big and small, making the connections it would need to wage something like a proxy war with Microsoft on the cloud software market.

For example, a new partnership announced in September with collaborative hot-work startup Notion – now valued at some $ 10 billion in a new funding round – will see the two companies move closer to their mutual clients. . This puts Notion in good company with Salesforce, which has become a key ally of AWS in recent months, as well as with small software startups that leverage the AWS platform through its network of partners.

Even before Notion’s deal, AWS at one point discussed building a “rebel alliance” of Microsoft rivals like Salesforce,


Soft

, and Dropbox to support Microsoft 365 through its own set of software, Insider reported previously.

Such a tactic wouldn’t be new to Amazon either, or new CEO Selipsky. As a senior manager of AWS in 2016, Selipsky helped lead joint AWS-Salesforce discussions to acquire collaboration startup Quip, and was instrumental in negotiating the AWS and Salesforce cloud deal, reported The Information.

Whether building these alliances poses a real threat to Microsoft, continuing to deepen or establish new partnerships with software vendors also helps AWS maintain its leading position in the cloud market, analysts say.

This is all the more evident as the move to the cloud means more than just moving IT infrastructure: companies are increasingly looking for software tools that will work well with their new cloud platforms.

Microsoft is currently gaining customers through infrastructure and software, Gartner analyst Ed Anderson told Insider by offering its Azure cloud alongside its Office suite and Teams video conferencing app.

“For Amazon to have a strong competitive position, it needs to attract customers who are going to make decisions on both sides of this equation,” Anderson said. “And that’s what Amazon needs partners for.”

Partnering with smaller software companies like Notion also helps AWS ensure that its platform is fully integrated with these tools when customers come knocking on the door, and is important in showing them that it has a multitude. software solutions to choose from. And when software startups build their products using AWS, like Freshworks and Cohesity have done, it helps the cloud giant ensure that it remains its cloud of choice as it grows. growth.

“Being sort of seen as the partner that startups can lean on is a highly scalable model,” said Dan Newman, analyst at Futurum Research. “It’s sticky. It’s very difficult to leave this ecosystem for a lot of startups.”

For software startups, the ability to work with AWS can also be a huge opportunity: “Each of these vendors would have reasons to move closer to AWS: closer engineering ties, another sales channel, getting a preferred status in terms of AWS transfer, ”said Rob Oliver, analyst at Baird.

Indeed, Amazon recognized the opportunity in software startups, creating programs like the “SaaS Factory” to mentor, provide resources and even connect them with corporate clients. Sumo Logic, an alumnus of the program, is now a $ 1.75 billion company. However, working with AWS can come at risk for partners, as the cloud giant has been accused of ripping off products from competitors and partners.

But ultimately, for startups and AWS, the relationship can be lucrative, especially since Microsoft has also attracted startups to build on its own Azure cloud. “So for AWS to be competitive and at scale there, the ecosystem is really important to them,” said Rebecca Wettemann of Valoir.

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