Walmart's NVIDIA partnership could diversify its revenue streams

BI Intelligence

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Last week, US retailer Walmart unveiled plans to use NVIDIA’s graphic processing units (GPU) to power machine learning tools in its burgeoning cloud computing business. The company hopes to build data center “processing farms” one-tenth the size of Amazon’s AWS within six months, which will allow it to analyze and pull insights from the growing buckets of customer data.

The move is in part an effort by Walmart to become more competitive with Amazon, which is increasingly encroaching on the retailer’s space.

Although Walmart’s cloud ambitions may seem like an odd pivot for the company, they could open up a lucrative alternate revenue channel. Here’s why:

Cloud computing is one of the fastest-growing business segments. Companies have been increasingly relying on cloud growth over the past several quarters to offset declines in their hardware and legacy systems segments. For example, revenue from Microsoft Azure jumped 97% year-over-year (YoY) in Q2 2017, but the company’s total revenue grew just 4% YoY during the quarter.
The cloud market is consolidating and in need of more viable options. Combined, the top four public cloud vendors — AWS, Microsoft, IBM, and Google — account for the majority of the market. And by 2019, the AWS-Microsoft duopoly is projected to push out 90% of Infrastructure as a Service (IaaS) providers, according to Gartner. Walmart's cloud offering could provide a viable alternate option to these vendors.
Investing in cloud infrastructure will allow Walmart to capture some of the growing demand for AI. Cloud companies have the computing power necessary to process the massive buckets of data being collected by businesses every day. By developing its cloud offerings now, Walmart will be able to take advantage of the growing demand for AI segments such as machine learning, computer vision, and natural language processing, all of which are becoming an integral part of many businesses, both in and out of retail.

Cloud computing — on-demand, internet-based computing services — has been successfully applied to many computing functions in recent years. From consumer-facing, web-based productivity apps like Google Docs to enterprise database management suites, the tools businesses rely on are increasingly moving to the cloud.

But developing a cloud strategy is no easy task. Public cloud solutions will likely come to dominate the market over the next decade, but business constraints, such as security concerns and the limitations of existing infrastructure, make it difficult for companies to fully adopt the public cloud right now.

That means that hybrid clouds, in which multiple cloud implementations (including public and private) are connected, will remain popular for the time being, at least until these constraints are addressed. The tech giants that dominate the IaaS market — Amazon, IBM, Microsoft, and Google — are constantly expanding their offerings to address current business constraints as they compete for market share.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that:

Explains the different cloud computing strategies and benefits of cloud computing.
Evaluates key business considerations – security needs, demand predictability, existing infrastructure, and maintenance capabilities – for enterprises choosing between cloud implementations.
Provides and outlook for trends and major players in the cloud computing market.

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