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Salesforce and Amazon Web Services' expanded partnership gives both a stronger competitive edge against their common rival: Microsoft

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Salesforce CEO Marc Benioff in Washington DC in October 2019.
NICHOLAS KAMM/AFP via Getty Images

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  • Salesforce and AWS are expanding their existing partnership, the companies announced Thursday.
  • It gives both companies a better competitive advantage over chief rival Microsoft, analysts said.
  • The partnership will make it easier to share data and build apps between both platforms.
  • See more stories on Insider's business page.

Salesforce and Amazon Web Services are working together more closely and analysts say it will give each a leg up as they take on mutual rival Microsoft. 

On Thursday, Salesforce and Amazon Web Services announced an expansion of their partnership to make it easier to share data between their platforms and services. The companies also plan to integrate certain AWS features into Salesforce products and make it easier for developers to build custom apps on top of both platforms. 

The new initiative builds on a partnership which dates back to 2016, when Amazon rolled out Salesforce's software company-wide and Salesforce chose AWS as its "preferred public cloud" for its international expansion plans (the latter a four year deal worth about $400 million, according to a WSJ report at the time). 

In 2018, the duo added data integrations and in 2019 Salesforce began offering AWS transcription services via its call center tools

This latest expansion will help create a more seamless experience for joint Salesforce and AWS customers, analysts said. 

"Salesforce recognizes AWS's strong position in the cloud platform space," Valoir analyst Rebecca Wettemann told Insider, and the integrations will "reduce ongoing management burden for customers."

Crucially, it also gives both companies a better competitive advantage over their chief rival Microsoft.

AWS is trying to stave off Microsoft as it increasingly encroaches on its hold as the number one cloud provider, while Salesforce is trying to bolster its collaboration suite to compete with Microsoft and fend off the firm's competing CRM product, Dynamics 365. The partnership with allows both to lean on each other's strengths to offer a full-stack of services, from productivity tools to cloud infrastructure. 

"The challenge for AWS - Salesforce, because they are two different companies, is being on the same page, having common goals, creating as seamless of a user experience as possible to give it that same feeling as a fully integrated stack, being developed by one company," said Futurum Research analyst Dan Newman.

This partnership is a step towards alleviating that challenge, he said, and is a sign that both feel that they're "best in class" for their respective industries and that platform integration and developer interoperability will lead to a better overall product than what competitors offer. 

The partnership will also help Salesforce's strategy of focusing more heavily on industry specific tools, said Gartner analyst Jason Wong. AWS and Salesforce plan to launch joint, industry-specific tools by embedding AWS services in Salesforce tools, beginning with a telehealth product where healthcare organizations can build a personalized patient care platform. 

Having those pre-built integrations makes it easier for the customer to start using both tools, Wong said. Salesforce has previously said its industry focus is a major competitive differentiator against Microsoft. 

Meanwhile, the former CEO of Salesforce-owned Tableau, Adam Selipsky, is set to become the new CEO of AWS in July, which will likely help strengthen the ongoing partnership, analysts said.

The deepening of the AWS-Salesforce partnership is also a loss for Google, which is struggling to build enterprise credibility, Wettemann said. 

"Salesforce and Google have announced a few partnerships through the years but they've never really taken off because Google is still challenged to be taken seriously in the enterprise cloud space," she said.  "This is Salesforce putting more eggs in the Amazon (and not Google) basket."

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