Countering Amazon

Microsoft and SAP join forces in the cloud

Microsoft's Satya Nadella (left) and SAP's Bill McDermott: Feet on the ground, products in the cloud. Source: Julien Faure/Opale/Leemage/laif; Bloomberg

Deliberate or not, Microsoft and software maker SAP crashed a party of Amazon Web Services, the world’s largest provider of cloud computing. Amazon’s subsidiary, known as AWS, was staging its week-long “re:Invent” conference in Las Vegas when the two rival IT firms announced a cooperation deal on Tuesday, challenging the retail giant’s dominance of online computer services.

Microsoft and SAP, the world’s largest maker of business software, have some catching up to do. They hope the combination of SAP’s main product, known as S/4Hana, and Microsoft’s cloud product Azure will convince more customers to buy these services instead of choosing those of Amazon or rivals, which include Oracle, Alibaba and Google.

Microsoft and SAP, both founded in the early 1970s, have for decades relied on selling software installed on computers located at home or in the office, but that market is at risk of shrinking. Cloud computing has been booming, as consumers access internet services via their mobile phones and companies want real-time access to data and analytic capabilities without having to spend lots of money on their own computer infrastructure or programs.

Amazon Web Services, founded in 2006 by the Seattle-based firm, jumped into this market early, offering its customers the use of software or storage space via its remote servers. It became the industry’s largest within a decade.

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