Walmart and Microsoft team up to slow Amazon’s roll

Discussion
Walmart's Doug McMillon and Microsoft's Satya Nadella - Photos: Walmart, Microsoft
Jul 17, 2018
George Anderson

Today, Walmart and Microsoft announced a strategic partnership intended to speed the retailer’s ongoing digital transformation.

The five-year deal cements Microsoft as Walmart’s preferred cloud solutions provider. As such, it provides other retailers with high-profile proof that there exists an alternative to using Amazon Web Services for cloud services.

“Walmart is a people led, tech empowered company, and we’re excited about what this technology partnership will bring for our customers and associates,” said Doug McMillon, Walmart CEO, in statement. “Whether it’s combined with our agile cloud platform or leveraging machine learning and artificial intelligence to work smarter, we believe Microsoft will be a strong partner in driving our ability to innovate even further and faster.”

Satya Nadella, CEO of Microsoft, told The Wall Street Journal that competing with Amazon “is absolutely core” to the partnership between his company and Walmart.

“How do we get more leverage as two organizations that have depth and breadth and investment to be able to outrun our respective competition,” he said.

DISCUSSION QUESTIONS: What will the new five-year cloud computing and AI deal between Microsoft and Walmart mean for the retailer and the companies that compete with it? Do you see the deal giving either companies an edge going forward over Amazon? Does the timing of the announcement today have anything to do with Amazon?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Does this give them an edge over Amazon? It gives other retailers options they may not have had before and could begin to change the playing field."
"There is a positive, self-reinforcing benefits loop that will accrue to both Microsoft and Walmart from this partnership."
"I believe the timing of the Microsoft-Walmart announcement concurrent with Prime Day is no coincidence."

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21 Comments on "Walmart and Microsoft team up to slow Amazon’s roll"


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Jon Polin
BrainTrust

Walmart and Amazon are competing to win consumer loyalty and consumer dollars. This Microsoft-Walmart announcement may demonstrate that there are alternatives to Amazon Web Services for cloud storage, but I don’t see this announcement changing the Walmart-Amazon competition for the consumer.

Lyle Bunn (Ph.D. Hon)
Guest

Gaining better access to the strategy that drives technology enablement will be good for Walmart, which would be wise to treat Microsoft as a partner and not a supplier. Exploiting data, improving customer experiences, streamlining processes and empowering management decision-making and supplier relationships will all serve Walmart well. Retail is developing a growing hunger for Watson-level intelligence. In the meantime, Microsoft and Walmart can make giant strides forward.

Adrian Weidmann
BrainTrust

Teaming brick-and-mortar powerhouse Walmart with one of the technology superpowers makes terrific sense. It could tip the scales when comparing Walmart to Amazon. The retail revolution of finding that perfect balance between online and physical stores continues to evolve. This combination certainly brings best-of-breed together in a potentially transformative way. Shopping — whether online or in a physical store — will require various forms and manifestations of AI. Each of these giants will bring their expertise to the table and both, along with all of us watching, will experience the new retail unfold in front of us.

Zel Bianco
BrainTrust

I believe this is a positive and perhaps critical step. It is one that both Walmart and Microsoft recognize will provide a realistic chance of gaining an advantage over Amazon, or more likely will let them at least hold their own.

Lee Kent
BrainTrust

Now we’re talking! Walmart, together with Microsoft, is challenging Amazon’s Web Services. Is the plan then to offer these services to other retailers? Things could get very interesting then. Does this plan give them an edge over Amazon? It gives other retailers options they may not have had before and could begin to change the playing field. And that’s my 2 cents.

Charles Dimov
Guest

Sounds like a great pact, as long as the two company cultures blend and they keep their eye on delivering outstanding value to Walmart customers. That is the only way to out-Amazon, Amazon.

For retailers — as long as Walmart keeps working on improving its marketplace, maybe there is a chance that it will become a good alternative to Amazon’s marketplace.
Another big advantage for retailers is that with a few more strong competitors to Amazon, perhaps this will take away some of the arrogance that retailers feel when negotiating on their latest marketplace store, marketing contribution, etc. Competition in this space is important to the market — for consumers and retailers alike!

Good luck Walmart and Microsoft. Keep your eyes on the ball!

Jeff Sward
BrainTrust

This is long overdue. I am a fan of Amazon for certain kinds of shopping and buying, but I always prefer brick-and-mortar buying unless I am making a replacement or replenishment household purchase. I am a bigger fan of competition. This will undoubtedly contribute to the race to the bottom in pricing and margins, but that’s inherent in competition. Let the games begin.

Ken Lonyai
BrainTrust

Well, it seems that Doug and Satya read and take lessons from my articles on RetailWire. This has strong overtones of my proposal in
Would a radical partnership help Walmart thwart Amazon?.

Although not quite the same (yet!), Walmart partnering for cloud services and using that partnership for leverage against Amazon and AWS is the point.

In this case, there are really three winners; Walmart, Microsoft, and Google. Undoubtedly vendors (especially smaller ones) that don’t utilize Azure are going to be “disadvantaged” somehow in Walmart’s eyes, so both Microsoft and Walmart gain a bit by moving them to Azure. But Google, although trying to be competitive with Microsoft, would most definitely prefer less AWS usage by m-/e-commerce and retail-oriented businesses which when in bed with Amazon, chip away at Google’s revenues.

All-in-all, the net impact on Amazon will be minimal and until the new partners follow my full proposal, this is likely more PR than anything else.

Peter Charness
BrainTrust

There is a positive, self-reinforcing benefits loop that will accrue to both Microsoft and Walmart from this partnership. Presumably some of the partnership advancements will, as Microsoft builds them into its platform, become available to all retailers which will strengthen the health of the retail industry overall. While I don’t underestimate Amazon’s capacity to innovate, in this case Amazon’s “we do it all ourselves” approach vs. this partnership approach will, I think, leave Amazon at a disadvantage. Good news for the rest of retail.

Kai Clarke
BrainTrust

This is a well-timed announcement to keep Walmart’s technology presence “in the picture” during Amazon’s Prime Day. From a functional perspective it only raises the question, what is so wrong with Walmart’s current cloud computing and AI providers and equipment? Why would the world’s largest retailer have ever been moving forward with technology that doesn’t give it an edge over Amazon? That is what this announcement hints at.

Christopher Jordan
Guest

Given their friendly relationship with Google as of late, I’m surprised Walmart went with Microsoft.

Broadly speaking, I don’t believe this partnership (though realistically, it’s a public vendor selection announcement) to be a huge strategic shift or “game changing.” Walmart needs cloud infrastructure and the three most likely choices are: Amazon Web Services, Google or Microsoft.

Given their joint plays with Google Home/Shopping and JD.com, I was a little surprised that Google wasn’t the natural selection for cloud infrastructure. I view a continued and sustained push by the Walmart/Google pairing as the quickest way to cause some genuine disruption for Amazon.

My best guess is that the Microsoft decision is largely a diversification play and Walmart will continue to work with Google on the business side.

Shep Hyken
BrainTrust

This isn’t about slowing down Amazon. This is about staying competitive — or getting ahead of the competition. The digital/tech age is changing not only how retailers do business, but also how consumers enjoy buying. Retailers must meet consumer expectations. The first one to do so has an edge. Others eventually catch up. Then the cycle starts over.

Cynthia Holcomb
BrainTrust

The answer to this announcement is complex. Is the excitement about computing power, big name leverage, back-end operations or the possibility and opportunity of human-driven AI cognitive processing? Microsoft, not currently known for intuitive successes (Bing) and Walmart with its teams of developers (Walmart Labs) working to crack human-based AI applications seem an unlikely merger of disparate modes of thinking.

The partnership hints at solutions requiring Microsoft to have deep insights and knowledge of how an individual human makes the emotional decision to purchase a specific product like apparel, home furnishings, food, shoes, etc. Retailers are not technologists and technologists are not retailers. While both struggle to solve for relevant AI-enabled, customer-centric solutions in the digital world. As far as Amazon? Good PR for Walmart, furthering Walmart’s efforts to keep a horse in the race.

Andrew Blatherwick
BrainTrust
It seems that Amazon is driving major retailers to find new partners that can help them to stay competitive. Why would any retailer want to work with Amazon who are becoming their major competitor? It would be like feeding the hand that bites you. This five year agreement therefore makes perfect sense for both companies, and I would have to say all retailers, as it will provide more competition to Amazon, deliver benefits to the whole retail sector over time and hopefully drive faster change in retail technology. What it does show is that retailers like Walmart have realized that they have to embrace technology and change to be able to keep up the fight. Amazon is a technology company and is gaining significant advantage by being at the forefront of technology development. Retailers have to spend more in this area to survive and prosper, not bunker down in the hope that reducing costs will enable them to survive. Is Microsoft the complete answer? No it is not, Walmart knows that it is one part… Read more »
Paula Rosenblum
BrainTrust

It’s about time retailers stopped subsidizing their competition.

Dave Wendland
BrainTrust

Make no mistake, every move that a traditional retailer makes today has something to do with Amazon. I applaud Walmart’s willingness to look for common ground and align with another industry leader such as Microsoft. I believe more relationships will emerge (they must!) to effectively compete in an ever-changing market. With or without gaining an edge over Amazon, it is imperative that every retailer step out of their comfort zone and make strategic decisions — and alignments — for their future and to better serve their customers.

Ray Riley
BrainTrust

Microsoft is the best partner for Walmart to accelerate their efforts in AI, and Walmart is a great partner for Microsoft’s retail deployment. MSFT’s AI work in health care and other sectors has been pioneering, and its application within a retail business as large as Walmart will be interesting to watch. I certainly think the announcement has a lot to do with optics especially during the Prime Day craze.

James Tenser
BrainTrust

I believe the timing of the Microsoft-Walmart announcement concurrent with Prime Day is no coincidence. Anything to grab some market attention from Amazon and slow its progress, even a little bit.

There’s a four-way “air war” underway between AWS, Google, Microsoft’s Azure, and IBM. Nipping at their heels are Alibaba, Oracle, Salesforce and a handful of other mid-sized players.

With its vast resources, Walmart could have decided to build its own cloud infrastructure, but discretion is the better part of valor. In the announced deal, Microsoft gets a high-volume showcase customer; Walmart keeps its tech focus on stores and proprietary digital experiences.

Other retailers may well view this partnership through the same lens that they view AWS. With Azure powering Walmart.com, it may seem wiser to host one’s online store in someone else’s cloud.

Jeff Miller
Guest

I see this more as a battle for the cloud between Microsoft, Amazon, Google and Oracle than a battle for the shopper between Amazon and Walmart. Good technology partnership and press release for both companies but nothing that moves the needle for where people choose to shop.

Min-Jee Hwang
Guest

The announcement of Walmart and Microsoft joining forces before Amazon Prime Day is a strategic move. This unique partnership between a successful brick-and-mortar and a technology powerhouse will both challenge and threaten Amazon’s web services. With these two companies working together to actively compete against Amazon, there’s implications of a new era of customer experience in the retail industry.

With Microsoft, Walmart will now have access to strategies that enable technology to be integrated into the overall Walmart experience for both the employees and the customers. This will lead to increased customer satisfaction, streamlined company processes, capitalization on data, and offering management the ultimate position to make well-informed decisions based on company data.

Retail is trending towards omnichannel shopping experiences. This means that the Microsoft-Walmart partnership is not only a huge lunge at Amazon, but it may also prompt future partnerships from other brands down the road.

Harley Feldman
BrainTrust

Walmart taking the lead with Microsoft means it will have access to the latest cloud and AI technologies, two areas where Microsoft is applying massive resources to stay ahead in the race in both areas. For other retailers, it means that they will have another offering for cloud computing and AI rather than using the Amazon cloud. The deal will give an edge to Walmart and Microsoft as Walmart is the largest store-based and online retailer while Microsoft is a leader in cloud computing and certainly an innovator in AI. Pooling their resources will provide a juggernaut in the retail space. The timing of the announcement probably has more to do with the legal arrangements than due to Amazon’s Prime Day.

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Braintrust
"Does this give them an edge over Amazon? It gives other retailers options they may not have had before and could begin to change the playing field."
"There is a positive, self-reinforcing benefits loop that will accrue to both Microsoft and Walmart from this partnership."
"I believe the timing of the Microsoft-Walmart announcement concurrent with Prime Day is no coincidence."

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