By Jim Lundy
(Aragon Research) – Walmart woke up two weeks ago and discovered it has a new competitor: Amazon. This was after Amazon bought Whole Foods for U.S. $13.7 billion.
While this move caused tremors in food distribution markets and grocery stores, what Amazon didn’t expect was such a fast reaction from Walmart. Walmart is now telling its suppliers and partners that they will not be allowed to run their applications and services on Amazon’s Web Services (AWS) Cloud Platform.
The issue according to Walmart is that it doesn’t want Amazon to access data from its competitors. Our take is that this move by Walmart represents an indicator of how serious Walmart takes Amazon in the retail and product distribution markets. In an era where more and more software companies spy on their customers, you can’t really blame Walmart for taking this stance.
Some will say that Walmart is overreacting and that it could alienate suppliers, given that AWS is the largest Cloud provider for SaaS Services. While alienating providers is a possibility, our take is that suppliers cannot afford to alienate Walmart, who gives them turnkey distribution and to a large extent, guaranteed revenues.
Microsoft Azure, Google, and IBM Cloud Alternatives
This anti-AWS stance by Walmart would be a boon to Microsoft Azure, whose cloud service is a top competitor of Amazons. This is a new development to watch, as it signifies how Amazon can become a new competitor in new markets. Microsoft won’t let this opportunity go either. We expect it to have offers for Walmart suppliers that make it easy for them to migrate. Google and IBM should make these offers as well, since we don’t expect Walmart to back down from this edict to their suppliers.
Digital Competition: Every Market Could Be Disrupted
The bigger implication here is that large providers can enter new markets at anytime. Executives in every industry need to throw out their old assumptions that their markets will not change. In the digital era, every market is open for grabs. The providers who are disrupting markets are the ones like Amazon who have fully embraced Digital, which means they can move at a pace many enterprises cannot. Enterprises that have not embraced Digital Transformation are at risk of more nimble competitors outmaneuvering them.
Transform, or Risk Becoming Obsolete
The new era of the fully digital enterprise means new competition. Enterprises need to be prepared or face dire consequences.
The growing team at Aragon can help. Aragon’s coverage of Digital, including topics such as Digital Transaction Management, Digital Business Platforms and the fully Digital Workplace means you get the insight and advisory you need.