Microsoft Teams With Elon Musk's SpaceX to Push Cloud Battle With Amazon Into Orbit
October 20 2020 - 6:29AM
Dow Jones News
By Andy Pasztor and Aaron Tilley
Microsoft Corp. is teaming with Elon Musk's SpaceX and others as
the software giant opens a new front in its cloud-computing battle
with Amazon.com Inc., targeting space customers.
Microsoft would help connect and deploy new services using
swarms of low-orbit spacecraft being proposed by SpaceX, and more
traditional fleets of satellites circling the earth at higher
altitudes. Microsoft's initiative targeting commercial and
government space businesses, formally launched Tuesday, comes about
three months after Amazon Web Services, the e-retailer's cloud
unit, disclosed its space-focused effort.
Some analysts have projected that overall revenue from
space-related cloud services could total about $15 billion by the
end of the decade, at least several times higher than current
levels.
Competition in the cloud between Amazon, the market leader, and
No. 2 Microsoft has been heating up in recent years. The pandemic
has intensified the fight as companies accelerate their shift to
the cloud and make vendor choices that could last for years. At the
same time, military and intelligence agencies are ramping up
spending on a range of space projects.
Space is only the latest area where the two cloud giants are
going head-to-head. In June, Amazon launched a dedicated business
unit focused on securing space-related contracts. Amazon already
counts Maxar Technologies Inc. and Capella Space as customers,
helping them manage data coming from satellites.
Microsoft's goal is to create integrated, secure networks,
linking various cloud, space and ground capabilities. The system,
for instance, would accumulate and analyze huge volumes of data,
supporting missions such as space-debris surveillance and missile
warnings and helping to control the orbits of commercial
satellites.
In addition to working with SpaceX, formally known as Space
Exploration Technologies Corp., Microsoft said it is in partnership
with Luxembourg's SES SA, which separately operates a network of
larger satellites significantly farther from earth under the brand
O3b. Microsoft officials declined to disclose the size of their
anticipated investment, but the initiative targets some of the
fastest-growing national-security endeavors in space, sometimes
harnessing artificial intelligence.
SpaceX, which is in the process of deploying its Starlink
project consisting of thousands of high-speed internet satellites
intended to provide connectivity around the globe, makes a natural
partner for Microsoft. A major reason is that Amazon founder Jeff
Bezos is pursuing his own low-orbit satellite constellation. Mr.
Bezos also owns Blue Origin, a rocket company competing with
SpaceX.
Mr. Musk has sparred with Mr. Bezos before. The SpaceX CEO who
also runs electric-vehicle maker Tesla Inc. this year called for a
break up of Amazon after the retailer rejected a book about the
coronavirus pandemic. Amazon later said it had taken the action in
error.
Microsoft has teamed before with competitors of its crosstown
cloud rival. Microsoft and Walmart Inc. struck a cloud-computing
deal two years ago. And this year the software giant and FedEx
Corp. struck a partnership. Months earlier, Amazon had temporarily
blocked some of its vendors from using some FedEx services.
Amazon's and Microsoft's steps in space come as the U.S. Defense
Department is moving rapidly to embrace such sprawling
constellations of smaller spacecraft for communications,
surveillance and other applications. Pentagon brass have said
smaller, lighter and more maneuverable satellites are essential to
protect U.S. assets from potential hostile actions in space.
Microsoft is "focused deeply on governments and defense," said
Tom Keane, a corporate vice president. The space effort, he said,
provides an opportunity "to bring commercial technology and
innovation to the military."
SpaceX recently won a demonstration contract for a new
generation of missile-warning satellites, which industry officials
say could serve as the backbone for eventual Microsoft forays into
that arena.
The U.S. national-security establishment also is shifting to
greater cloud use. Microsoft last year beat out Amazon for a
potential $10 billion cloud-computing contract for the Pentagon.
Amazon has challenged the decision, which has since been affirmed
by the Pentagon.
Write to Andy Pasztor at andy.pasztor@wsj.com and Aaron Tilley
at aaron.tilley@wsj.com
(END) Dow Jones Newswires
October 20, 2020 06:14 ET (10:14 GMT)
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