SEATTLE, WA - As Amazon takes a bigger step into the brick-and-mortar grocery scene, some of its food focused competitors seem to be distancing themselves from the mega corporation. New reports suggest that both Target and Walmart plan to scale back the use of Amazon Web Services (AWS), a subsidiary of Amazon that provides cloud computing platforms on a paid subscription basis and also the company’s most profitable business segment.
According to CNBC, Target is scaling back its use of AWS in an effort to both take greater control over its infrastructure and to avoid paying into Amazon’s bottom line. Sources familiar with the matter name Microsoft Azure as a potential cloud operator, but CNBC also notes that Google and Oracle have been hard at work to improve their cloud systems.
As for Walmart, another of Amazon’s biggest brick-and-mortar rivals, Fortune reports that the company is in the process of developing its own cloud-based data centers. Walmart has called on Nvidia, a designer of graphics processing units, to help them power their cloud computing platform. According to the source Walmart plans to go “full steam” into the project, using clusters of Nvidia chips in the process. Global Equities analyst Trip Chowdhry says that Walmart is building a "GPU farm" that will be about a tenth of the size of rival Amazon Web Services "GPU" cloud.
This isn’t Walmart’s only attempt to distance itself from Amazon either. As we previously reported, Walmart recently announced a partnership with Google to offer its products via voice shopping with Google’s assistant as a counter to Amazon’s Alexa.
As Amazon’s most profitable segment, nearly 10% of Amazon’s total revenues and around 35% of the company’s total EBITDA as Forbes estimates, its not likely that just these moves by Walmart and Target alone will have a significant impact on Amazon’s finances. But, as Amazon continues to expand into other projects, it could theoretically come at the cost of business for AWS. For example, Netflix has been a prominent AWS customer in the past, but now with Amazon’s video streaming services gaining steam, the two companies now find themselves head-to-head.
How will Amazon’s bottom line fare in the coming months as more and more companies grow weary of AWS? AndNowUKnow will keep our reporters’ eyes on the horizon.
