As Amazon.com Inc. (AMZN) - Get Report increasingly competes with Walmart Stores Inc. (WMT) - Get Report both online and offline, Walmart has pressured some tech partners not to use Amazon Web Services, Jeff Bezos' market-leading cloud computing service. But such efforts are likely to have little payoff.
The spat, reported in the Wall Street Journal, has hardly disrupted AWS, which has a substantial lead over rivals such as Microsoft Corp.'s (MSFT) - Get Report Azure and Alphabet Inc.'s (GOOGL) - Get Report Google Cloud Platform. Amazon, Google and Microsoft are so vast, however, with interests in so many different niches, that each of them could have a practically endless list of peeved rivals who might want to steer business away from the cloud giants.
So while Walmart might be pushing its partners to not use Amazon's cloud services, other companies could be urging its partners to drop Google or Microsoft's cloud services, potentially driving business to Amazon.
"I'd be surprised if a company like Wal-Mart wasn't doing something like this, but in terms of overall market trends and competitive positioning, this is a bit like King Canute trying to stop the incoming tide," said Synergy Research Group Chief Analyst and Managing Director John Dinsdale, referring to the Danish king who according to legend tried to hold back the sea. "I don't think it is going to make a whole lot of difference."
For its part, Walmart denies that it prohibits its tech partners from using AWS. "Our vendors have the choice of using any cloud provider that meets their needs and their customers' needs," Wal-Mart spokesman Dan Toporek. "It shouldn't be a big surprise that there are cases in which we'd prefer our most sensitive data isn't sitting on a competitor's platform."
Without a doubt, Wal-Mart and Amazon have a fierce rivalry in retail. With Wal-Mart's online endeavors and Amazon's purchase of Whole Foods, the competition only grows more intense. "Plenty of suppliers are standing up to Walmart and refusing to be told that they can't use the leading infrastructure technology platform," an Amazon spokesperson said. "Tactics like this are bad for business and customers and rarely carry the day."
"Remember also that for every instance of a technology buyer trying to influence its suppliers away from AWS, there are likely just as many organizations trying to influence suppliers away from Microsoft Azure or Google Cloud Platform," Dinsdale said.
Amazon's operations extend from retail to video streaming and cloud computing. Google runs everything from Internet search and mobile phone operating systems to YouTube videos, smart thermostats and, soon, self-driving cars. In addition to its cloud business, Microsoft has an enterprise software empire, sells Xboxes and owns social networking site LinkedIn.
"So each of them has a long list of competitors within their core businesses who will no doubt be buying cloud computing services from someone," Dinsdale added.
Walmart's shares rose 0.9% to $76.25.
Amazon's purchase of Whole Foods shook up a number of stocks, as Jim Cramer and the AAP team noted. Get a free trial subscription to Action Alerts PLUS.
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