A Blog by Jonathan Low

 

Jul 19, 2018

Amazon Foes Walmart and Microsoft Strengthen Tech Partnership

The enemy of my enemy is my friend. But can the two plus two of this alliance surpass Amazon's five? JL


Jay Greene and Sarah Nassauer report in the Wall Street Journal:

Walmart agreed to use Microsoft Corp.’s cloud technology to power functions that could include algorithms for purchasing and sales-data sharing with vendors, the two companies said, deepening a partnership between two of Amazon.com's most powerful rivals. The five-year deal pairs Amazon’s largest retail competitor with its closest challenger in cloud computing. Walmart and Microsoft will look into new ways to use the retailer’s trove of customer and product data, with Microsoft engineers embedded in Walmart offices to help.
Walmart Inc. WMT -0.14% agreed to use Microsoft Corp.’s MSFT -0.78% cloud technology to power functions that could include algorithms for purchasing and sales-data sharing with vendors, the two companies said, deepening a partnership between two of Amazon.com Inc.’s AMZN -0.05% most powerful rivals.
The five-year deal, announced Tuesday, pairs Amazon’s largest retail competitor with its closest challenger in cloud computing. Walmart has warmed recently to working with technology companies, as it fends off Amazon’s retail ambitions and expertise in data.
The shared rivalry with Amazon “is absolutely core to this,” Microsoft CEO Satya Nadella said in an interview.
“How do we get more leverage as two organizations that have depth  and breadth and investment to be able to outrun our respective competition,” Mr. Nadella said.
Walmart plans to deploy Microsoft’s machine-learning, artificial-intelligence and other services to help employees, for example, pick products that go on shelves and optimize the performance of freezers and other equipment. The retailer is aggressively cutting costs as it invests in growing sales online, and it is using tech to analyze its operations, an area of Amazon’s expertise. Some retailers have been loath to use Amazon’s technology, in large part because its cloud unit provides the majority of Amazon’s operating income, said Ed Anderson, an analyst with market-research firm Gartner Inc. Microsoft’s Azure, second in market share to Amazon Web Services, has developed into a viable cloud-infrastructure alternative for many, he said.
Walmart has developed its own massive cloud-computing operation, in part to analyze rafts of product and sales data, an area of Amazon expertise. But Walmart has been expanding its use of Azure since it 2016 acquisition of Jet.com, which built its business on the Microsoft tech.
“We are moving fast, and we are looking for partners to help us do that,” said Marc Lore, Walmart’s head of U.S. e-commerce and founder of Jet.com.
The Microsoft deal is the latest example of Walmart collaborating with Amazon’s tech rivals. The retailer agreed last summer to list its products on Google Express, the online-shopping marketplace of Alphabet Inc.’s Google, enabling voice-ordered purchases on Google Home products that compete with Amazon’s Alexa service.
Now, Walmart and Microsoft will look into new ways to use the retailer’s trove of customer and product data, with Microsoft engineers embedded in Walmart offices to help. Those efforts include discussing plans to jointly work on a new system to share product-sales data with suppliers, said an executive familiar with the plans. Currently, consumer-goods companies learn how their products are selling at Walmart through the system known as Retail Link.
Walmart isn’t using Microsoft in at least one key area: cashierless stores, Mr. Lore said. Walmart is working on developing them. It is a niche where Amazon has an early lead with its Amazon Go location in Seattle.

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