Aug
26
2019
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Oracle files new appeal over Pentagon’s $10B JEDI cloud contract RFP process

You really have to give Oracle a lot of points for persistence, especially where the $10 billion JEDI cloud contract procurement process is concerned. For more than a year, the company has been complaining  across every legal and government channel it can think of. In spite of every attempt to find some issue with the process, it has failed every time. That did not stop it today from filing a fresh appeal of last month’s federal court decision that found against the company.

Oracle refuses to go quietly into that good night, not when there are $10 billion federal dollars on the line, and today the company announced it was appealing Federal Claims Court Senior Judge Eric Bruggink’s decision. This time they are going back to that old chestnut that the single-award nature of the JEDI procurement process is illegal:

“The Court of Federal Claims opinion in the JEDI bid protest describes the JEDI procurement as unlawful, notwithstanding dismissal of the protest solely on the legal technicality of Oracle’s purported lack of standing. Federal procurement laws specifically bar single award procurements such as JEDI absent satisfying specific, mandatory requirements, and the Court in its opinion clearly found DoD did not satisfy these requirements. The opinion also acknowledges that the procurement suffers from many significant conflicts of interest. These conflicts violate the law and undermine the public trust. As a threshold matter, we believe that the determination of no standing is wrong as a matter of law, and the very analysis in the opinion compels a determination that the procurement was unlawful on several grounds,” Oracle’s General Counsel Dorian Daley said in a statement.

In December, Oracle sued the government for $10 billion, at the time focusing mostly on a perceived conflict of interest involving a former Amazon employee named Deap Ubhi. He worked for Amazon prior to joining the DOD, where he worked on a committee of people writing the RFP requirements, and then returned to Amazon later. The DOD investigated this issue twice, and found no evidence he violated federal conflict of interest of laws.

The court ultimately agreed with the DOD’s finding last month, ruling that Oracle had failed to provide evidence of a conflict, or that it had impact on the procurement process. Judge Bruggink wrote at the time:

We conclude as well that the contracting officer’s findings that an organizational conflict of interest does not exist and that individual conflicts of interest did not impact the procurement, were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Plaintiff’s motion for judgment on the administrative record is therefore denied.

The company started complaining and cajoling even before the JEDI RFP process started. The Washington Post reported that Oracle’s Safra Catz met with the president in April, 2018 to complain that the process was unfairly stacked in favor of Amazon, which happens to be the cloud market share leader by a significant margin, with more than double that of its next closest rival, Microsoft.

Later, the company filed an appeal with the Government Accountability Office, which found no issue with the RFP process. The DOD, which has insisted all along there was no conflict in the process, also did in an internal investigation and found no wrong-doing.

The president got involved last month when he ordered Defense Secretary Mark T. Esper to look into the idea that, once again, the process has favored Amazon. That investigation is ongoing. The DOD did name two finalists, Amazon and Microsoft, in April, but has yet to name the winner as the protests, court cases and investigations continue.

The controversy in part involves the nature of the contract itself. It is potentially a decade-long undertaking to build the cloud infrastructure for the DOD, involves the award of a single vendor (although there are several opt-out clauses throughout the term of the contract) and involves $10 billion and the potential for much more government work. That every tech company is salivating for that contract is hardly surprising, but Oracle alone continues to protest at every turn.

The winner was supposed to be announced this month, but with the Pentagon investigation in progress, and another court case underway, it could be some time before we hear who the winner is.

Aug
01
2019
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President throws latest wrench in $10B JEDI cloud contract selection process

The $10 billion, decade-long JEDI cloud contract drama continues. It’s a process that has been dogged by complaints, regulatory oversight and court cases. Throughout the months-long selection process, the Pentagon has repeatedly denied accusations that the contract was somehow written to make Amazon a favored vendor, but today The Washington Post reports President Trump has asked the newly appointed Defense Secretary, Mark T. Esper, to examine the process because of concerns over that very matter.

The Defense Department called for bids last year for a $10 billion, decade-long contract. From the beginning, Oracle in particular complained that the process favored Amazon. Even before the RFP process began Oracle executive Safra Catz took her concerns directly to the president, but at that time he did not intervene. Later, the company filed a complaint with the Government Accountability Office, which ruled that the procurement process was fair.

Finally, the company took the case to court, alleging that a person involved in defining the selection process had a conflict of interest, due to being an employee at Amazon before joining the DoD. That case was dismissed last month.

In April, the DoD named Microsoft and Amazon as the two finalists, and the winner was finally expected to be named some time this month. It appeared that we were close to the finish line, but now that the president has intervened at the 11th hour, it’s impossible to know what the outcome will be.

What we do know is that this is a pivotal project for the DoD, which is aimed at modernizing the U.S. military for the next decade and beyond. The fact is that the two finalists made perfect sense. They are the two market leaders, and each has tools, technologies and experience working with sensitive government contracts.

Amazon is the market leader, with 33% market share. Microsoft is No. 2, with 16%. The No. 3 vendor, Google, dropped out before the RFP process began. It is unclear at this point whether the president’s intervention will have any influence on the final decision, but The Washington Post reports it is an unusual departure from government procurement procedures.

Aug
01
2019
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Why AWS gains big storage efficiencies with E8 acquisition

AWS is already the clear market leader in the cloud infrastructure market, but it’s never been an organization that rests on its past successes. Whether it’s a flurry of new product announcements and enhancements every year, or making strategic acquisitions.

When it bought Israeli storage startup E8 yesterday, it might have felt like a minor move on its face, but AWS was looking, as it always does, to find an edge and reduce the costs of operations in its data centers. It was also very likely looking forward to the next phase of cloud computing. Reports have pegged the deal at between $50 and $60 million.

What E8 gives AWS for relatively cheap money is highly advanced storage capabilities, says Steve McDowell, senior storage analyst at Moor Research and Strategy. “E8 built a system that delivers extremely high-performance/low-latency flash (and Optane) in a shared-storage environment,” McDowell told TechCrunch.

Jul
31
2019
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Amazon acquires flash-based cloud storage startup E8 Storage

Amazon has acquired Israeli storage tech startup E8 Storage, as first reported by Reuters, CNBC and Globes and confirmed by TechCrunch. The acquisition will bring the team and technology from E8 in to Amazon’s existing Amazon Web Services center in Tel Aviv, per reports.

E8 Storage’s particular focus was on building storage hardware that employs flash-based memory to deliver faster performance than competing offerings, according to its own claims. How exactly AWS intends to use the company’s talent or assets isn’t yet known, but it clearly lines up with their primary business.

AWS acquisitions this year include TSO Logic, a Vancouver-based startup that optimizes data center workload operating efficiency, and Israel-based CloudEndure, which provides data recovery services in the event of a disaster.

Jul
15
2019
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Amazon adds Hindi to the Alexa Skills Kit

Users of Amazon’s voice assistant will soon be able to talk to Alexa in Hindi. Amazon announced today that it has added a Hindi voice model to its Alexa Skills Kit for developers. Alexa developers can also update their existing published skills in India for Hindi.

Amazon first revealed last month during its re: MARS machine learning and artificial intelligence conference that it would add fluent Hindi to Alexa. Before, Alexa was only able to understand a few Hinglish (a portmanteau of Hindi and English) commands. Rohit Prasad, vice president and head scientist for Alexa, told Indian news agency IANS that adding Hindi to Alexa posed a “contextual, cultural as well as content-related challenge” because of the wide variety of dialects, accents and slang used in India.

Along with English, Hindi is one of India’s official languages (Google Voice Assistant also offers Hindi support). According to Citi Research, Amazon holds about a 30% market share, about the same as its main competitor, Walmart-backed Flipkart.

Jul
12
2019
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Judge dismisses Oracle lawsuit over $10B Pentagon JEDI cloud contract

Oracle has been complaining about the procurement process around the Pentagon’s $10 billion, decade-long JEDI cloud contract, even before the DoD opened requests for proposals last year. It went so far as to file a lawsuit in December, claiming a potential conflict of interest on the part of a procurement team member. Today, that case was dismissed in federal court.

In dismissing the case, Federal Claims Court Senior Judge Eric Bruggink ruled that the company had failed to prove a conflict in the procurement process, something the DOD’s own internal audits found in two separate investigations. Judge Bruggink ultimately agreed with the DoD’s findings:

We conclude as well that the contracting officer’s findings that an organizational conflict of interest does not exist and that individual conflicts of interest did not impact the procurement, were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Plaintiff’s motion for judgment on the administrative record is therefore denied.

The company previously had filed a failed protest with the Government Accountability Office (GAO), which also ruled that the procurement process was fair and didn’t favor any particular vendor. Oracle had claimed that the process was designed to favor cloud market leader AWS.

It’s worth noting that the employee in question was a former AWS employee. AWS joined the lawsuit as part of the legal process, stating at the time in the legal motion, “Oracle’s Complaint specifically alleges conflicts of interest involving AWS. Thus, AWS has direct and substantial economic interests at stake in this case, and its disposition clearly could impair those interests.”

Today’s ruling opens the door for the announcement of a winner of the $10 billion contract, as early as next month. The DoD previously announced that it had chosen Microsoft and Amazon as the two finalists for the winner-take-all bid.

Jul
05
2019
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A 23-year-old B2B company has shown how keen India is for tech IPOs

Away from the limelight of the press and the frenzy of fundraising, a tech startup in India has achieved a feat that few of its peers have managed: going public.

IndiaMART, the country’s largest online platform for selling products directly to businesses, raised nearly $70 million in a rare tech IPO for India this week.

The milestone for the 23-year-old firm is so uncommon for India’s otherwise burgeoning startup ecosystem that, beyond being over-subscribed 36 times, pent up demand for IndiaMART’s stock saw its share price pop 40% on its first day of trading on National Stock Exchange on Thursday — a momentum that it sustained on Friday.

The stock ended Friday at Rs 1326 ($19.3), compared to its issue price of Rs 973 ($14.2).

IndiaMART is the first business-to-business e-commerce firm to go public in India. Its IPO also marks the first listing for a firm following the May reelection of Narendra Modi as the nation’s Prime Minister and the months-long drought that led to it.

Accounting firm EY said it expects more companies from India to follow suit and file for IPO in the coming months.

“Now that national elections are over and favorable results secured, IPO activity is expected to gain momentum in H2 2019 (second half of the year). Companies that had filed their offer documents with the Indian stock markets regulator during H2 2018 and Q1 2019 may finally come to market in the months ahead,” it said in a statement (PDF).

IndiaMART’s origin

The fireworks of the IPO are just as impressive as IndiaMART’s journey.

The startup was founded in 1996 and for the first 13 years, it focused on exports to customers abroad, but it has since modernized its business following the wave of the internet.

“The thesis was, in 1996, there were no computers or internet in India. The information about India’s market to the West was very limited,” Dinesh Agarwal, co-founder and CEO of IndiaMART, told TechCrunch in an interview.

Until 2008, IndiaMART was fully bootstrapped and profitable with $10 million in revenue, Agarwal said. But things started to dramatically change in that year.

“The Indian rupee became very strong against the dollar, which dwindled the exports business. This is also when the stock market was collapsing in the West, which further hurt the exports demand,” he explained.

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Dinesh Agarwal, founder and CEO of IndiaMart.com, poses for a profile shot on July 29, 2015 in Noida, India.

By this time, millions of people in India were on the internet and, with tens of millions of people owning a feature phone, the conditions of the market had begun to shift towards digital.

“This is when we decided to pursue a completely different path. We started to focus on the domestic market,” Agarwal said.

Over the last 10 years, IndiaMART has become the largest e-commerce platform for businesses with about 60% market share, according to research firm KPMG. It handles 97,000 product categories — ranging from machine parts, medical equipment and textile products to cranes — and has amassed 83 million buyers and 5.5 million suppliers from thousands of towns and cities of India.

According to the most recent data published by the Indian government, there are about 50 to 60 million small and medium-sized businesses in India, but only around 10 million of them have any presence on the web. Some 97% of the top 50 companies listed on National Stock Exchange use IndiaMART’s services, Agarwal said.

That’s not to say that the transition to the current day was a straightforward process for the company. IndiaMART tried to capitalize on its early mover advantage with a stream of new services which ultimately didn’t reap the desired rewards.

In 2002, it launched a travel portal for businesses. A year later, it launched a business verification service. It also unveiled a payments platform called ABCPayments. None of these services worked and the firm quickly moved on.

Part of IndiaMART’s success story is its firm leadership and how cautiously it has raised and spent its money, Rajesh Sawhney, a serial angel investor who sits on IndiaMART’s board, told TechCrunch in an interview.

IndiaMART, which employs about 4,000 people, is operationally profitable as of the financial year that ended in March this year. It clocked some $82 million in revenue in the year. It has raised about $32 million to date from Intel Capital, Amadeus Capital Partners and Quona Capital. (Notably, Agarwal said that he rejected offers from VCs for a very long time.)

The firm makes most of its revenue from subscriptions it sells to sellers. A subscription gives a seller a range of benefits including getting featured on storefronts.

Where the industry stands

There are only a handful of internet companies in India that have gone public in the last decade. Online travel service MakeMyTrip went public in 2010. Software firm Intellect Design Arena and e-commerce store Koovs listed in 2014, then travel portal Yatra and e-commerce firm Infibeam followed two years later.

India has consistently attracted billions of dollars in funding in recent years and produced many unicorns. Those include Flipkart, which was acquired by Walmart last year for $16 billion, Paytm, which has raised more than $2 billion to date, Swiggy, which has bagged $1.5 billion to date, Zomato, which has raised $750 million, and relatively new entrant Byju’s — but few of them are nearing profitability and most likely do not see an IPO in their immediate future.

In that context, IndiaMART may set a benchmark for others to follow.

“The fact that we have a homegrown digital commerce business, serving both the urban and smaller cities, and having struggled and been around for so long building a very difficult business and finally going public in the local exchange is a phenomenal story,” Ganesh Rengaswamy, a partner at Quona Capital, told TechCrunch in an interview. “It keeps the story of India tech, to the Western world, going.”

Generally, it is agreed that there are too few IPOs in India and the industry can benefit from momentum and encouragement of high profile and successful public listings.

“There is a firm consensus that in India, markets will prefer only the IPOs of companies that are profitable. And investors in India might not value those companies. Both of these issues are being addressed by IndiaMART,” said Sawhney.

“We need 30 to 40 more IPOs. This will also mean that the stock market here has matured and understands the tech stocks and how it is different from other consumer stocks they usually handle. More tech companies going public would also pave the way for many to explore stock exchanges outside of India.

“Indian market is ready for more tech stocks. We just need to get more companies to go out there,” Sawhney added, although he did predict that it will take a few years before the vast majority of leading startups are ready for the public market.

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The Indian government, for its part, this week announced a number of incentives to uplift the “entrepreneurial spirit” in the nation.

Finance minister Nirmala Sitharaman said the government would ease foreign direct investment rules for certain sectors — including e-commerce, food delivery, grocery — and improve the digital payments ecosystem. Sitharaman, who is the first woman to hold this position in India, said the government would also launch a TV program to help startups connect with venture capitalists.

The path ahead for IndiaMART

IndiaMART has managed to build a sticky business that compels more than 55% of its customers to come back to the platform and make another transaction within 90 days, Agarwal — its CEO — said. With some 3,500 of its 4,000 employees classified as sales executives, the company is aggressive in its pursuit of new customers. Moving forward, that will remain one of its biggest focuses, according to Agarwal.

“Most of our time still goes into educating MSMEs on how to use the internet. That was a challenge 20 years ago and it remains a challenge today,” he told TechCrunch.

In recent years, IndiaMART has begun to expand its suite of offerings to its business customers in a bid to increase the value they get from its platform and thus increase their reliance on its service.

IndiaMART has built a customer relationship management (CRM) tool so that customers need not rely on spreadsheets or other third-party services.

“We will continue to explore more SaaS offerings and look into solving problems in accounting, invoice management and other areas,” said Agarwal.

The firm also recently started to offer payment facilitation between buyers and sellers through a PayPal -like escrow system.

“This will bridge the trust gap between the entities and improve an MSME’s ability to accept all kinds of payment options including the new age offerings.”

There’s an elephant in the room, however.

A bigger challenge that looms for IndiaMART is the growing interest of Amazon and Walmart in the business-to-business space. Several startups including Udaan — which has raised north of $280 million from DST Global and Lightspeed Venture Partners — have risen up in recent years and are increasingly expanding their operations. Agarwal did not seem much worried, however, telling TechCrunch that he believes that his prime competition is more focused on B2C and serving niche audiences. Besides he has $100 million in the bank himself.

Indeed, as Quona Capital’s Rengaswamy astutely noted, competition is not new for IndiaMART — the company has survived and thrived more than two decades of it.

“Alibaba came and gave up,” he noted.

An important — and unanswered question — that follows the successful IPO is how IndiaMART’s stock will fare over the coming months. A glance to the U.S. — where hyped companies like Uber, Lyft and others have seen prices taper off — shows clearly that early demand and sustained stock performance are not one and the same.

Nobody knows at this point, and the added complexity at play is that the concept of a tech IPO is so uncommon in India that there is no definitive answer to it… yet. But IndiaMART’s biggest achievement may be that it sets the pathway that many others will follow.

Jun
10
2019
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AWS is now making Amazon Personalize available to all customers

Amazon Personalize, first announced during AWS re:Invent last November, is now available to all Amazon Web Services customers. The API enables developers to add custom machine learning models to their apps, including ones for personalized product recommendations, search results and direct marketing, even if they don’t have machine learning experience.

The API processes data using algorithms originally created for Amazon’s own retail business,  but the company says all data will be “kept completely private, owned entirely by the customer.” The service is now available to AWS users in three U.S. regions, East (Ohio), East (North Virginia) and West (Oregon), two Asia Pacific regions (Tokyo and Singapore) and Ireland in the European Union, with more regions to launch soon.

AWS customers who have already added Amazon Personalize to their apps include Yamaha Corporation of America, Subway, Zola and Segment. In Amazon’s press release, Yamaha Corporation of America Director of Information Technology Ishwar Bharbhari said Amazon Personalize “saves us up to 60% of the time needed to set up and tune the infrastructure and algorithms for our machine learning models when compared to building and configuring the environment on our own.”

Amazon Personalize’s pricing model charges five cents per GB of data uploaded to Amazon Personalize and 24 cents per training hour used to train a custom model with their data. Real-time recommendation requests are priced based on how many are uploaded, with discounts for larger orders.

Jun
10
2019
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Salesforce is officially making Seattle its second HQ after its Tableau acquisition

Here’s an interesting by-product of the news today that Salesforce would be acquiring Tableau for $15.7 billion: the company is going to make Seattle, Wash. (home of Tableau) the official second headquarters of San Francisco-based Salesforce, putting the company directly in the face of tech giants and Salesforce frenemies Microsoft and Amazon.

“An HQ2, if you will,” Salesforce CEO Marc Benioff quipped right after he dropped the news during the press and analyst call.

HQ2, of course, is a reference to Amazon and its year-long, massively publicised, often criticised and ultimately botched search (it eventually cancelled plans to build an HQ in NYC, but kept Arlington) for its own second headquarters, which it also branded “HQ2.”

If real estate sends a message — and if you’ve ever seen Salesforce Tower in San Francisco, you know it does for this company — Salesforce is sending one here. And that message is: Hello, Microsoft and Amazon, we’re coming at you.

As we pointed out earlier today, there is a clear rivalry between Microsoft and Salesforce that first began to simmer in the area of CRM but has over time expanded to a wider array of products and services that cater to the needs of enterprise knowledge workers.

The most well-known of these was the tug-of-war between the two to acquire LinkedIn, a struggle that Microsoft ultimately won. Over the years, as both have continued to diversify their products to bring in a wider swathe of enterprise users, and across a wider range of use cases, that competition has become a little more pointed. (Indeed, here’s some perfect timing: just today, Microsoft expanded its business analytics tools.)

I’d argue that the competitive threat of Amazon is a little more remote. At the moment, in fact, the two work very closely: specifically in September last year, Amazon and Salesforce extended an already years-long deal to integrate AWS and Salesforce products to aid in enterprise “digital transformation” (one of Salesforce’s catch phrases).

Placing Salesforce physically closer to Amazon could even underscore how the two might work closer together in the future — not least because cloud storage is now a notably missing jewel in Salesforce’s enterprise IT crown as it squares up to Microsoft, which has Azure. (And it’s not just a Seattle thing. Google, which has Google Cloud Platform, acquired Tableau competitor Looker last week.)

On the other hand, you have to wonder about the longer-term trajectory for Salesforce and its ambitions. The Tableau deal takes it firmly into a new area of business that up to now has been more of a side-gig: data and analytics. Coming from two different directions — infrastructure for AWS and customer management for Salesforce — enterprise data has been a remote battleground for both companies for years already, and it will be interesting to see how the two sides approach it.

Notably, this is not Salesforce’s first efforts to lay down roots in the city. It established an engineering office in the city in 2017 and, as Benioff pointed out today, putting deeper roots into what he described as a “unique market with tremendous talent” will open up the company to tapping it even more.

Jun
04
2019
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How Kubernetes came to rule the world

Open source has become the de facto standard for building the software that underpins the complex infrastructure that runs everything from your favorite mobile apps to your company’s barely usable expense tool. Over the course of the last few years, a lot of new software is being deployed on top of Kubernetes, the tool for managing large server clusters running containers that Google open sourced five years ago.

Today, Kubernetes is the fastest growing open-source project and earlier this month, the bi-annual KubeCon+CloudNativeCon conference attracted almost 8,000 developers to sunny Barcelona, Spain, making the event the largest open-source conference in Europe yet.

To talk about how Kubernetes came to be, I sat down with Craig McLuckie, one of the co-founders of Kubernetes at Google (who then went on to his own startup, Heptio, which he sold to VMware); Tim Hockin, another Googler who was an early member on the project and was also on Google’s Borg team; and Gabe Monroy, who co-founded Deis, one of the first successful Kubernetes startups, and then sold it to Microsoft, where he is now the lead PM for Azure Container Compute (and often the public face of Microsoft’s efforts in this area).

Google’s cloud and the rise of containers

To set the stage a bit, it’s worth remembering where Google Cloud and container management were five years ago.

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