> Microsoft is preparing to bring Amazon as a customer for its 365 cloud productivity tools in a deal worth over $1 billion, news site Insider reported on Tuesday, citing an internal document and a person familiar with the matter.
> 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).
1 million seats though? Who are they buying so many licenses for? Surely Amazon only has thousands of employees and even with turnover rates it wouldn't reach 1 million. Am I misunderstanding seats
I think it makes sense to think excel is sustainable on its own.
Also I've heard there are people in the US military who pretty much make PowerPoint slide decks all day.
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.
> 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).
All joking aside, this the user count is probably being driven more by email and possibly Teams than Excel. I would guess that most of the licenses are for what Microsoft calls "frontline workers"[0].
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.
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.
Nah there's no way they have that many in Finance, but they do have that many when you include 2-3 degrees of separation.
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.
All of Amazon has ~1.5M employees. That includes everyone picking orders, and doing any kind of logistics and delivery. I really don't think they have about 1M employees who regularly exchange financial spreadsheets.
Office isn’t just for spreadsheets. Office is the whole shebang, including Outlook, Active Directory, Teams, etc.
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.
A: you don't nee a licensed office seat to be a user in AD
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.
> For warehouse operations, not everyone needs to be a user in AD
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.
I can't reply to @filoleg's response, but here we go:
> 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
excel isn't just used by finance. I can use any number of command line tools, scripting languages, jupyter notebooks, etc, but sometimes is just faster to throw it in excel, do a little futzing around and send it over to the non-technical folks in a tool they know how to use.
It always seemed like an obvious area of expansion for Amazon.
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.
In your mind what would have been a smart acquisition? Why do you think the number of players who could "scale" is so small? Up until the O365 apocalypse, there were tons of people operating 100k to 1m user email systems on a few servers with a single digit number of staff (i.e. every university and most big non-tech companies).
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.
Yes perhaps there's room to run with OneMedical - we'll see.
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.
Microsoft sales folks ran around to all the large organizations with on-prem mail systems (both Unix based and Exchange) offering deeply discounted Office licenses and free UNISYS contractors for migrations if the org would commit to moving to paid O365 seats.
Lots of well built and managed systems were tossed out for short term discounts, locking people into a glorified version of Hotmail.
I would have asked mike_d about the "O365 apocalypse" if veqq hadn't. Your link is helpful, but still puzzling. If the onset of Office 365 got rid of tons of staff teams at universities and non-tech big companies, but each team only had a single-digit number of people, can you really call that an apocalypse?
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:
Teams is (was? I'm still on classic at work) such hot garbage. Ctrl Shift V is paste unformatted. You'd think Ctrl Shift C is copy unformatted but no. It is call whatever char you're on. Doesn't matter if there are ten people in the chat.
Here's the kicker: you can't reassign or remove shortcuts.
Amazon must really hate Chime if it wants to move to teams.
I really like this idea. I would totally pay Amazon for email, and would not have many reservations recommending it to tech illiterate. If you are going to get in bed with BigTech, Amazon feels the least bad to me (but they are all horrible for different reasons).
Well, if the current choice is between Gmail and Outlook, it seems like bad mojo that all the operators of e-mail are also operators of advertising networks; they are the "attention brokers" of the world.
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).
It's hard for me to relate this accounting category that the article is talking about to actual Amazon products. I mean, of course you can rebrand the "marketplace" concept as "advertising", but which of Amazon's products would I be using, if I just have a link that I want people to click on, and I assume that my target audience is not already on the amazon retail website? -- It sort of depends on what you define as "advertising", but to me it means shoving stuff in my face that I didn't want shoved in my face. If I go to "amazon.com", I'm voluntarily saying "sell me stuff, I actually need to buy something right now".
You seem to be confusing Amazon (the company), with only Amazon (the online retail website). The Amazon Company has a number of advertising vehicles outside of just their retail website. There is also a significant amount of advertising within their retail website as well. Have you not noticed all of the “sponsored” listings and other types of ads for (often inferior) products to show up under your search terms? Beyond that, “ad revenue” is often the vehicle for accounting data brokering due to the significant amount of tracking they do across all their various sites. There is also direct video ad revenue that comes from Twitch, is planned for Amazon Prime, so on and so forth.
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”.
I'm just amazed at how they can market and sell their products that don't even work as they should. Every day at my company we have so many issues with Teams, it makes me wonder if wr're paying millions for an indie software.
From the comments as of writing, few read between the lines of this sloppy reporting: it's to standardize cloud-desktop apps for Amazon's internal use.
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.
I doubt it. I think this is a replacement for the existing on-prem Outlook, as well as replacing Quip and Workdocs which have been languishing for years. But I really doubt this replaces Slack/Chime for chat/video respectively.
Teams is a horrible software, but every single aws person I have talked to would love to use it instead of Chime.
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 had exactly one customer that used and loved Chime. For their use case, Chime was also cheaper than getting all their user base on O365.
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.
The interesting angle I am now considering is does there need to be an anti-trust case brought against MS to force them to separate Office from the rest of the company?
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.)
I mean, it's a business like any other; they still need email and spreadsheets (actually, they probably need more spreadsheets than the average business). When I was at Amazon, they already did use Office, except it was an on-prem and sort of annoyingly-outdated version. Presumably they've decided the slight embarrassment of using Microsoft's cloud services is worth having a modern version of Office.
Unless LibreOffice can offer 100% bug-for-bug compatibility with Excel, you are going to be in a constant fight with your finance, accounting, tax, and modelling teams who know nothing else. I would expect shadow-IT to have a thriving black market of getting real Excel installed for the needy.
Finance + upper management can use what they want and the rest of the company something else. It is not like there is not a lot of interexchange and when it does happen, there is definitely never any macro involved.
When it is going, they’re more dependent on your business, plus you’re no longer competitors, at least not in an area where they have a multi decade advantage.
> 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).