Walmart and Microsoft team up on cloud computing service in bid against Amazon

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Walmart and Microsoft are doubling down in their offensive against Amazon.

The retail giant said Tuesday it was entering into a strategic partnership with Microsoft on 'digital transformation' that will involve Walmart leveraging the firm's Azure cloud solutions.    

The five-year agreement is aimed at helping Walmart compete better against Amazon, which is taking a growing share of retail sales in the United States and globally.

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Walmart said Tuesday it was entering into a strategic partnership with Microsoft on 'digital transformation' that will involve Walmart leveraging the firm's Azure cloud solutions

Microsoft and Walmart said the partnership was focused on using artificial intelligence and other technology tools to help manage costs, expand operations and innovate faster.  

'Walmart's commitment to technology is centered around creating incredibly convenient ways for customers to shop and empowering associates to do their best work,' said Walmart CEO Doug McMillon.

Microsoft's business cloud computing platform, known as Azure, will help Walmart manage operations ranging from refrigeration and air conditioning to improving its supply chain and transportation.

'The world's leading companies run on our cloud, and I'm thrilled to partner with Walmart to accelerate their digital transformation with Microsoft Azure and Microsoft 365,' said Satya Nadella, CEO of Microsoft.

Walmart is already using Microsoft services for some applications and will expand that to tap into Microsoft's machine learning, artificial intelligence, and data platforms, according to the statement.

Working with Microsoft will bring together two of Amazon's biggest rivals as it captures an even greater share of the retail market.  

Walmart is already using Microsoft services for some applications and will expand that to tap into Microsoft's machine learning, artificial intelligence, and data platforms

Walmart is teaming up with Microsoft on 'digital transformation' of the onetime retail leader as it ramps up efforts to compete against Amazon

Earlier this month, the research firm eMarketer said Amazon's surging growth would enable it to capture 49.1 percent of US online retail sales this year, up from 43.5 percent.

Amazon is far ahead of online rivals like eBay, with 6.6 percent of ecommerce, and Apple, at 3.9 percent, according to eMarketer, which estimated Walmart's share at 3.7 percent.

Despite this, Walmart continues to be Amazon's biggest retail competitor, while Microsoft is Amazon's largest rival in the cloud computing space. 

Nadella seemed to take note of this in an interview with the Wall Street Journal, noting that the shared rivalry is 'absolutely core' to the partnership. 

'How do we get more leverage as two organizations that have depth and breadth and investment to be able to outrun our respective competition,' Nadella told the Journal. 

Some are speculating whether the partnership could lead to collaboration on cashier-less technology - an area that's so far been spearheaded by Amazon. 

A report in June said Microsoft is working on building a system for checkout-free supermarkets that would track what shoppers add to carts or their basket as they move around the supermarket. 

HOW DO AMAZON'S GO STORES WORK?

In December 2016, Amazon unveiled a convenience store in downtown Seattle that replaced cashiers with technology found in self-driving cars.

It opened to the public in January 2018.

To start shopping, customers must scan an Amazon Go smartphone app and pass through a gated turnstile.

Ready-to-eat lunch items greet shoppers when they enter.

Deeper into the store, shoppers can find a small selection of grocery items, including meats and meal kits.

An Amazon employee checks IDs in the store's wine and beer section.

Amazon's first Go Store opened in Seattle earlier this year and are looking to expand and open stores in Chicago and San Francisco  

Sleek black cameras monitoring from above and weight sensors in the shelves help Amazon determine exactly what people take.

If someone passes back through the gates with an item, his or her associated account is charged.

If a shopper puts an item back on the shelf, Amazon removes it from his or her virtual cart.

Much of the store will feel familiar to shoppers, aside from the check-out process.

Amazon, famous for dynamic pricing online, has printed price tags just as traditional brick-and-mortar stores do.

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The Redmond-based software giant has shown sample technology to retailers from around the world and is reportedly in talks with Walmart about a potential collaboration.

Walmart is also said to be developing its own system, the Journal noted. 

Amazon launched an employee-only pilot of its Amazon Go stores in 2016, before opening its first Seattle store. 

Shoppers can freely browse the store, pulling items off of shelves, as Amazon's cashier-less technology takes note of what's been selected and charges their Amazon account.