Amazon's Reported Talks With Walmart and Target Appear to Be Just About Networking Software

It's far from clear at this moment that Amazon is ready to make its cashierless checkout technology fully available to the likes of Walmart and Target.
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Amazon.com’s  (AMZN) - Get Report reported talks with Walmart and Target signal a willingness by the company to work with rivals on open-source tech projects.

However, they aren’t necessarily a sign that Amazon is ready to fully license its cashierless checkout technology to them.

On Sunday, The Wall Street Journal reported that Amazon is in talks with Walmart  (WMT) - Get Report and Target  (TGT) - Get Report about having them join a recently-launched, open-source, tech initiative known as Dent. However, “a person close to Target and a Walmart spokesman” indicated that the retail giants currently don’t plan to participate.

Dent, which was announced in December, is an effort to create a Linux-based operating system for switches deployed in “edge” network environments such as corporate campuses, remote offices and bricks-and-mortar stores. At the time of the December announcement, the retail industry was declared to be Dent’s “initial use case.”

In addition to Amazon, Delta’s founding members include switching chip suppliers Marvell Technology  (MRVL) - Get Report and Mellanox Technologies  (MLNX) - Get Report -- the latter is set to be acquired by Nvidia  (NVDA) - Get Report -- Taiwanese contract manufacturers (ODMs) Wistron NeWeb and Delta Electronics and networking software startup Cumulus Networks.

Notably absent: Cisco Systems  (CSCO) - Get Report, the dominant player in the campus switching market, and Broadcom  (AVGO) - Get Report, the top provider of off-the-shelf Ethernet switching silicon.

Cisco’s campus switches rely on its proprietary IOS operating system (no relationship with Apple’s iOS). In addition, they’re often (though not always) powered by proprietary switching ASICs. As a result, if Dent was adopted on a large scale by Global 2000-type enterprises, it would act as a blow to Cisco.

But while the adoption of Dent, which is used by Amazon in the networking gear deployed for its cashierless Go stores, by the likes of Walmart and Target would make some waves in the networking hardware world, it wouldn’t by any means signal that Amazon’s fully-fledged cashierless system will be deployed at Walmart and Target stores.

Along with networking gear, Amazon’s system relies on edge servers, cameras, sensors and proprietary machine learning software. To date, it has been deployed at 25 Amazon Go convenience stores, along with (more recently) a 7,000 square-foot grocery store in Seattle.

Amazon has made it clear this month that it’s willing (for a price) to license its cashierless technology, which it has branded Just Walk Out, to third-party retailers. But it isn’t clear yet to what extent it’s willing to license it to major rivals.

Two weeks ago, Amazon said it had inked several deals with unnamed retailers to license Just Walk Out. The following week, Amazon and airport retail store owner OTG announced that Just Walk Out would be deployed at some of OTG’s Cibo Express Gourmet Market stores, initially at Newark Liberty Airport and New York's LaGuardia Airport.

To date, there hasn’t been any confirmation that Amazon is ready to license Just Walk Out to big-name retailers that it more directly competes with. Likewise, there hasn’t been any confirmation that such retailers are willing to partner so closely with Jeff Bezos & Co.

In 2018, Reuters reported that Microsoft  (MSFT) - Get Report, whose Azure cloud platform is used extensively by Walmart, is developing its own cashierless checkout system and has talked with Walmart about a potential tie-up. However, it isn’t clear at this moment how close Microsoft’s solution is to being commercialized, nor if and when Walmart plans to deploy it.

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