Walmart, Microsoft Forge Deeper Bond – And Stronger Bulwark Against AWS

Walmart has inked a five-year cloud services partnership with Microsoft with plans to build out its e-commerce capabilities by leveraging some of Microsoft's most-advanced cloud services.

The deal further advances a relationship that both companies see as insurance against a mutual antagonist: Amazon.

The retail giant said Tuesday it had named Microsoft its "preferred and strategic cloud provider" and committed to using multiple Microsoft cloud products, including Azure Infrastructure-as-a-Service and Microsoft 365 Software-as-a-Service across the organization.

[Related: Former Walmart CEO: Amazon 'Anti-Competitive' For Using AWS, Ad Profits To Sustain Retail Business]

Walmart was among the first retailers to push vendors in its supply chain away from AWS, the cloud leader, which competes with Walmart not only in the e-commerce space but, since last year's acquisition of Whole Foods, as a brick-and-mortar grocer.

Amazon's cloud division is also Microsoft's primary rival in the cloud market.

Walmart engineers will collaborate with Microsoft to re-platform hundreds of existing applications to cloud-native architectures and migrate them to Azure.

That will include a "significant portion" of walmart.com and samsclub.com, the company said in a prepared statement.

The revamped online platforms will leverage Azure's artificial intelligence, machine learning and analytic capabilities to power customer-facing services and internal applications, the retailer said.

Dan Neiweem, principal and co-founder at Avionos, a digital services firm based in Chicago, told CRN that tensions between retailers and Amazon had been ratcheting up for years, but they hit a crescendo when Amazon agreed to buy Whole Foods in June of last year.

"Retailers have been hearing about this retail apocalypse where they're going to go out of business, and Amazon is the one that's going to drive them out," Neiweem said.

Walmart was among the first to decide not only that it did not want to directly pay Amazon for cloud services, but it didn't want suppliers to do so either.

As part of that strategy, Walmart cultivated a relationship with Microsoft, and then "started pushing that out onto their suppliers" as a condition of doing business, Neiweem said.

Concerns weren't just about driving revenue to a competitor. There was also ill-ease in storing customer data on a competitor's platform, he said.

With the latest alliance, "Walmart is saying, 'I'm doubling down, I need the capability of having my technology expand, a partner that can help me get there, a partner that's neutral in the retail space," Neiweem told CRN.

Walmart will likely lean even more on suppliers to have them avoid AWS, or at least have a relationship with another cloud provider for any business that touches its own, he said.

For Microsoft, as well as Google, their agnostic position in retail is a potential boon for cloud business.

"You're going to see more and more of the technology vendors trying to figure out how they can manage the infrastructure they have in a way that's neutral," he said. "Microsoft is doubling-down, not just with Walmart but all retailers right now with Azure."

And for services providers like Avionos, they have to carefully navigate around pitfalls with a strategy for talking to retailers. Channel consultants don’t want to leave the impression in the minds of retailers that they're "pushing revenue to a competitor of mine that's trying to knock me about of business," Neiweem said.