How Microsoft Is Profiting From The Amazon Backlash

As Amazon invades the territory of retailers, they have decided to take their cloud storage business elsewhere.

 While we hear a lot about things like Amazon Prime Day or Amazon companies in the world of convenience stores without cash, the source of Internet revenue is not its retail effort: it is the company's cloud services business. Amazon's web services made $ 1.6 billion in profits in the first quarter of this year, news that sent the company's stock to a record $ 450 billion in market capitalization. AWS is a popular cloud storage option for both individuals and businesses. In 2016, AWS had more than 1 million users. When AWS shuts down from time to time, wide swaths of the internet feel the repercussions. During an AWS outage in March, widely used services such as Twilio, Slack and Atlassian were temporarily disconnected.

While many technology companies choose to rely on Amazon for their cloud storage needs, Amazon's biggest competitors are taking a different route. Walmart, Amazon's largest retail rival, recently announced a partnership with Microsoft to use its cloud infrastructure to power a variety of algorithms related to machine learning that will help optimize employee time and make operations more efficient. The five-year agreement is Walmart's latest effort to take the company into the 21st century and promises to help the company with tasks such as sharing sales data with suppliers, making better purchasing decisions, optimizing freezer performance and helping the Employees to choose which products get a premium shelf placement.

Walmart has made a variety of moves in recent years to help it compete with Amazon in the US. UU And all over the world, so this new partnership is not surprising. However, what you can expect less is the benefit that this gives Microsoft. As Microsoft Azure is the next provider of cloud computing services in addition to Amazon, Microsoft is reaping the rewards of retailers who prefer not to give their money (and their data) to their biggest rival. (Amazon, of course, has an extensive data privacy policy that describes what types of data it collects from AWS users and the established security and encryption protocols to prevent data access from external customers).

Microsoft has several retailers among its Azure customers: Honeywell (which sells smart home products that compete with the home security offerings connected to the Blink and Ring brand) and Asos (an online fashion hub that Amazon Fashion is trying to get a bite of) are two remarkable examples; others, such as Fabletics, HP and Adobe, also rely on Azure for their cloud processing needs. Last August, following the acquisition of Whole Foods by Amazon, Target announced that it would withdraw its digital business from AWS. The Kroger supermarket chain made a similar decision at the end of 2017, dividing its cloud storage needs between Microsoft and Google.

And then there is Walmart, which has even demanded that its suppliers not use AWS or risk that Walmart abandon its business. The Wall Street Journal reported that a Walmart customer approached the data storage service Snowflake Computing Inc. about the handling of their data, but would only reach an agreement if Snowflake executed its services in Azure. Snowflake streamlined its Azure bid and got the client's business as a result *.

Amazon has been the leading cloud computing platform since 2013, with Microsoft generally in second and Google in third. Microsoft's cloud platform is fast becoming a "viable cloud infrastructure alternative for many," an analyst at market research firm Gartner told the Wall Street Journal. As those threatened by Amazon's growth, or tired of a competitor handling their most sensitive data, have been abandoning the ship, Azure has been growing twice as fast as its competitor. In April, Microsoft overtook Amazon in terms of cloud revenue for the first time-Microsoft earned $ 6 billion from Amazon's $ 5.4 billion-marking a 93 percent increase over its previous year's revenue. In its earnings announcement last week, Microsoft posted earnings of 23 percent on top of that. With the next Amazon earnings report on July 26, we will discover if the growth of Microsoft's cloud services is really having an impact on Amazon's results. Retailers like Walmart surely expect that to be the case.