© April L. Brown/AP Walmart announced a five-year deal with Amazon cloud rival Microsoft.
Walmart Partners With Microsoft To Battle Amazon
Walmart Inc (NYSE: WMT) has a new partner in its ongoing battle to fend off Amazon.com (AMZN). On Tuesday, Walmart announced a five-year deal with Amazon cloud rival Microsoft Corp. (MSFT), and analysts say Walmart and Microsoft make a logical team.
Walmart will be taking advantage of Microsoft’s leading cloud and artificial intelligence technology to help improve its online and in-store businesses. In recent months, Microsoft has reportedly been demonstrating technology that would allow retailers such as Walmart to automate shopping and eliminate the need for cashiers and checkout lines in stores.
Amazon recently rolled out similar technology in its Amazon Go automated store in Seattle, where customers simply scan their phones as they enter the store and are automatically charged by cameras and sensors for items in their cart as they leave.
“Walmart’s commitment to technology is centered around creating incredibly convenient ways for customers to shop and empowering associates to do their best work,” Walmart CEO Doug McMillon says in a statement.
Walmart also said the company plans to migrate a major portion of Walmart.com and samsclub.com to Microsoft Azure. Microsoft is Amazon’s leading competitor in cloud computing.
Considering Walmart and Microsoft have a common competitor in Amazon and complementary strengths in the retail business, analysts say the two companies are a natural fit. Amazon could choose to license its Amazon Go technology to brick-and-mortar retailers at some point, but Berenberg analyst Dusan Milosavljevic says a Walmart partnership would be a long shot.
“Walmart was never going to partner with Amazon for obvious reasons, and Microsoft is the second-largest provider of cloud solutions in the world,” Milosavljevic says, according to CNN.
The partnership with Microsoft could help Walmart achieve its goal of 40 percent annual e-commerce revenue growth. Bank of America analyst Robert Ohmes says Walmart’s aggressive investments in technology have made the company one of the best-positioned traditional U.S. retailers in the market.
“We increasingly believe WMT’s U.S. business will benefit near-term from the discount store cycle that we expect over the next five to 10 years,” Ohmes says. “We believe WMT”s omni-channel transformation in the U.S. will continue to gain momentum and support more sustainable and predictable positive same-store sales and traffic at U.S. super centers.”
Bank of America has a “buy” rating and $98 price target for WMT stock.
Article source: US News & World Report
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