From CNBC:
Target is plotting a big move away from AWS as Amazon takes over retail.
Target is struggling mightily to compete with Amazon in retail, but it’s finding other ways to fight back.
The discount retailer is scaling back its use of Amazon Web Services, according to sources familiar with the matter, as the company aims to take greater control over its infrastructure and stop financing its chief rival. Amazon’s purchase of Whole Foods is the latest sign of how deep the e-commerce giant is moving into all forms of retail.
Microsoft Azure is among the rival cloud vendors vying to nab Target’s cloud business, said the sources, who asked not to be named because the plans are confidential. Google and Oracle are also beefing up their cloud offerings.
Like all big box stores, Target is being trounced by Amazon, which is selling more items for cheaper and delivering them faster. Target’s annual revenue is lower than it was five years ago –though the company has sold off its credit card business and pharmacy division during that stretch — and the stock has lost 23 percent of its market value in the past 12 months.
. . . .
While there’s little Target can do to impede Amazon’s dominance in retail, the emergence of other cloud providers at least allows the company to spend its computing and storage dollars elsewhere. According to one source, Target is planning to aggressively move e-commerce activities, mobile development and operations away from AWS through the end of the year and probably into 2018.
Link to the rest at CNBC
PG says it’s not just people in the traditional book business who suffer from Amazon Derangement Syndrome.
Switching cloud services providers, particularly when you have a lot of data and applications living in the cloud, is not a cost-free exercise.
In addition to sucking up IT hours (or paid consultant hours), the resources devoted to this silly attempt to undercut Amazon could be used for doing things that might actually please current customers and attract new ones.
PG just checked the Target website and easily concluded it’s not in the same league as Amazon’s. Spend money improving the online customer experience and you might sell more to your customers or even (gasp!) attract some Amazon customers to the Target website and stores.
No Target customer knows or cares which cloud service provider Target uses. This is the ultimate insider snark play. PG can almost hear Target IT managers snorting at each other in the break room.
If some Target PR drone hadn’t decide to pitch the story to CNBC, nobody outside of Target and cloudworld geeks would have known or cared that Target was switching from Amazon.
Now a few more people know, but nobody cares.
What makes this a silly attempt to undercut Amazon? A snark play? Fools errand? Short sighted? Amazon Derangement Syndrome?
The article tells us nothing about their motivations, intentions, objectives, or strategy.
I read the article earlier today in a different venue, and my first thoughts were about Target’s objectives, strategy, risk calculations, and cost benefit analysis. I wondered what assumptions they used in their decision, what assistance Microsoft might offer to gain their business, expected problems, etc.
The article tells us nothing that allows us to judge the wisdom of Target’s move. How do we know it’s the wrong move?
Is the information is this article sufficient to make a decision? If not, then how is it sufficient to criticize the decision?
Moodys analysis today paints a very different picture of Amazon than what we usually hear. It’s interesting reading.
(I realize this is contrary to the prevailing attitude in these comments. OK.)
Did you read the headline?
Do you believe Amazon is taking over retail?
The article doesn’t say anything about Microsoft inducements but they quote a source at Target as saying “the company aims to take greater control over its infrastructure and stop financing its chief rival.”
In the context of the headline, that doesn’t sound like an emotional kneejerk to you?
Absent other data…
The article cites a single unnamed source to make it’s claim that Target is, perhaps, spitefully abandoning AWS.
According to one source, Target is planning to aggressively move e-commerce activities, mobile development and operations away from AWS through the end of the year and probably into 2018.
That’s pretty much it. You really don’t know anything about that “source” or if they have any idea what they are talking about. Everything else in the article is conjecture, thinly veiled opinion and official non-statements.
And I agree with Terrance, even if they are doing what the source says, there’s nothing there telling us any meaningful details. Maybe MS offered Target a deal on Azure that is too good to pass up. Perhaps Target has identified some parts of their infrastructure that could be easily moved to Azure at a favorable cost/benefit ratio. Perhaps they have had some successes deploying cloud software in a platform independent way and are accelerating those successes for whatever reason. Anything could be going on, and this article provides no information in that regard. Like so many internet articles, it is just a provocative headline slapped on a sloppy pile of words.
I will go one further on DaveMich’s comment. Financial articles are notorious for attributing motive for phenomena with absolutely no actual evidence. If a stock goes up on a given day, there will be 10 articles with 10 different reasons for the move. No article should be taken at face value, but financial ones especially should not.
Terence OBrien,
Your argument assumes that whoever is leading this charge at Target is smart and wise and competent. The evidence of the last few years says they are not.
2014: Target leaked the credit card information of 70,000,000 customers. Oops.
2016: Target leaders welcomed their customers to use the bathroom of their choice. Instant boycott. Target’s stock price dropped 26% from the end of 2015. Oops.
My view is that Target missed a sea change. The thinking that once led them to success is now leading them to disaster, and they do not know how to change. Blaming Amazon is not a business strategy. It is an excuse for failure.
Agreed.
It’s a different landscape today.
The issue too many retailers face (aside from over retail building, which is self-inflicted) is they failed to recognize that, just as in publishing, the future is Digital First.
There is plenty of room (and need) for B&M but storefronts need to be integrated with top-notch online because is becoming the tool of first resort for shopping. As pointed out above, a lot of B&M check product specs and stock availability before leaving the house.
Even grocery shopping is showing a drift towards mixed online ordering/in-store pickup. A model where canned/boxed goods are preordered from a stored list and combined with meat and produce at pickup time can save consumers valuable time and engender deep customer loyalty.
Too many retailers still treat online as a totally separate customer base, asif there were no middle ground.
It’s biting them.
Target has never recovered from that massive data breach they had a few years ago. I know I drastically reduced my shopping there and I’ve spoken to many others who did the same.
it’s not just people in the traditional book business who suffer from Amazon Derangement Syndrome.
Indeed. Sometimes you can even find it on niche blogs.
Amazon was their competitor back when Target first decided to use their “cloud” platform. FAIL.
Any sane IT department would have real-time mirroring through an entirely different provider. If they can’t simply turn off AWS and go to their fallback cloud… FAIL.
Hopefully Target’s management holds lots of Amazon stock, because Target sucks at being a business…
Ask Target how their Canadian arm is doing.
They handled their (failed) expansion so badly, I’m surprised Target USA aren’t racing Sears to see who goes out of business first.
And when I saw how suppliers were treated in the “bankruptcy”, I wouldn’t give them a dime. Good riddance.
Excellent read on the subject.
http://www.macleans.ca/economy/business/what-really-happened-at-target-canada-the-retailers-last-days/
Doesn’t matter which side you are on, but Target really hurt themselves by stepping into the bathroom debate and still haven’t recovered.
That’s what I was thinking. They wanted to be PC and it bit them in the butt but they can’t admit that, so let’s blame Amazon somehow. Two birds. One stone.
Yeah. I was ambivalent about them before that. Now, you’d have to walk me in there at gunpoint and I’d STILL refuse to buy anything.
Grandstanding never helps.
The bathroom issue is a particularly stupid debate to get into because there already was a solution in place. Many venues quietly provide male/female/unisex bathrooms.
No press releases, no self-congratulation. No need to step into a culture war minefield.
Especially since they were already on the left’s hitlist over the owners’ political contributions.
https://www.cbsnews.com/news/target-boycott-movement-grows-following-donation-to-support-antigay-candidate/
They ended up with dual boycotts.
Target was a big customer at my full-time job. The bathroom thing didn’t hurt anywhere near as much as their hacking scandal in 2015 did. Almost nothing in unit sales changed after the bathroom scandal. We saw a dip of almost 35% after the credit card hack.
“I’m surprised Target USA aren’t racing Sears to see who goes out of business first.”
They are. Its just that Sears is much better at this failing thing.
Didn’t Target have a storefront on Amazon.com, but they went away in a snit?
Oh! Now that would have been handy for Casa Ney-Grimm! We do shop at the brick-and-mortar Target, but if we could get Target goods through Amazon… well, I’d shop Target-online-via-Amazon a lot more.
Amazon might not notice if Target moves their databases elsewhere; however, what if other retail stores and businesses (that are losing business to Amazon) think it’s a smart move and decide to do the same thing?
They still won’t notice.
AWS is big in other businesses.
Especially the ones that aren’t being forcefully rightsized after decades of building excess capacity.
In many industries, and the tech world in particular, there is a practice called “coopetition”. It means that just because you compete against somebody in one arena it doesn’t mean you can’t cooperate in another, especially if it means making $$$.
Back in the day, Microsoft’s Bill Gates famously urged Steve Jobs to license MacOS to PC builders like Dell and even offered to put him in touch with the relevant people. Why? Because he expected to make a ton of money selling Word and Excel.
Just today, Microsoft and Amazon announced they will partner to allow Alexa and Cortana to collaborate.
http://www.zdnet.com/article/microsoft-and-amazon-agree-to-enable-cortana-alexa-communication/?loc=newsletter_small_thumb&ftag=TRE-03-10aaa6b&bhid=19901053397699750196500774529668
Makes perfect sense.
Both systems have different strengths, different features, and are anchored on different hardware. Alexa doesn’t have much presence on PCs, Android, or iOS and Cortana has limited presence on standalone gadgets other than XBOX.
Teaming up they can outdistance Google and Apple by a mile and build up their own ecosystems much quicker without having to replicate each other’s strengths. There’ll be time enough for that later. 🙂
Now, Target switching might make sense if they want to take advantage of the features Azure offers that AWS doesn’t. There’s quite a few. And maybe Microsoft offered them a sweet deal. But if they are doing it solely to spite Amazon as the article implies… well, that’s just stupid.
Amazon losing Target’s account simply means they have a bit more capacity to sell to someone else. Hardly much pain. They’ll just shrug. Or laugh their heads off.
For Target, uprooting their operation will cost money and effort just to get back to where they were on AWS. I can just see the IT staff rolling their eyes at the “genius” in the executive suite that came up with this PR exercise.
It looks to be silly and petty posturing.
I’ve heard too that microsoft (was it microsoft? it’s been so long now) but anyway, they cooperate to get the deets and then sell their own version.
Not personal… just business
Samsung was a suppler for iPhone components while Apple was suing them for iPhone patent infringement in US courts. .
It happens all the time.
Well run companies have no room for emotional decisions.
When Target makes its choice of cloud vendors, they should think entirely of their own interest, not damaging Amazon.
There are good reasons to avoid a competitor’s platform for mission critical services. Perhaps the best is that you become dependent on your competitor’s continued success.
By using AWS, Target is betting that Amazon will continue to succeed. That means Target has to pull a punch against Amazon if the punch will cripple AWS, which would injure Target.
I think Target using AWS extensively stems from the same under-estimation of technology that lead them to under invest in their online business. If they had gotten that right, they would never have considered using AWS in any significant way.
Now Target is in a pickle: they are not only contributing to Amazon’s war chest in the battle against themselves, they have also handed Amazon control over the switch that could turn their online business off. Of course Amazon would never do that…
Go Bezos.
Netflix has no problem running on AWS.
Their needs are basic Infrastructure and nobody does basic infrastructure cloud cheaper than AWS. As long as AWS is reliable and cheap, why not use them?
They don’t get too hung up on AmazonStudios competing with them for movies and Tv shows.
Glad you brought up Netflix. Their approach to AWS supports my point. When you dance with the devil, it behooves you to know the devil well. Netflix’s cloud architecture is a marvel of distrust of AWS. Netflix has developed tools to regularly simulate random failures at AWS and have shaped their cloud architecture around rapid failover and disaster recovery. I think I’ve read that they even have something in place to fail over to Google if AWS completely implodes.
If Target had the technical savvy to field an architecture like Netflix’s, I would not blink at them staying on AWS, but looking at their past technical performance, I think they are wise to consider moving off AWS.
maybe it’s short-sighted, but I can’t say I blame them. I wouldn’t want to host my data on their servers either. Or pay them money when i’m losing money to them every quarter.
But i totally agree- improve your online experience if you want the customers to actually show up. which should always take priority/be a no brainer 😀
There’s a lot of other reasons my local Target isn’t even measuring up to my local Wal-mart, never mind comparing either of them online to Amazon.
And moving databases is a fool’s errand, even more so when you can’t ‘stop’ it to do said move. I was at Dell when they decided to stop using a third party mainframe and start ‘eating their own dog-food’. It wasn’t pretty, it wasn’t quick, there were times the database was ‘down’, and there were mistakes made here and there. And that was between two systems they had full control over.
Of course the move might be to help cover up Target’s other plunders/problems. This way they can blame any missing/lost/late orders and any data lose on Amazon. Clever – or maybe not so clever? 😉
I’ll believe Amazon’s “taken over” retail when the signs of every local restaurant, store, garage–you name it–here bear the trademark Amazon Smile. 😛
Yeah, take that, AWS! We’re gonna take our marbles and play elsewhere.
Oh, wait… Make that our marble, not marbleS. Yeah, you’re gonna be so sorry to lose us. Grrrr… 😉
Yes, exactly!
Just last year I needed an item that I knew Target carried. I was really pressed for time (and energy), so I visited the Target website, hoping I could simply order it and have it delivered.
First off, it was really difficult to actually find the item on the site. I couldn’t just search for that item and get that item. Instead the search delivered about 10 pages that I had to click through, and the item wasn’t among those pages. I had to modify my search terms and click through another batch of pages. And then, when I located the item, it was out of stock in the warehouse, but could be ordered from somewhere else to arrive in 2 weeks.
I gave up. It was something my daughter needed for a friend’s birthday, so she came up with another idea that we could order from Amazon.
Q.E.D.
fwiw, I see regular deliveries with the target bullet on them, so it seems to be working for my wife. Mostly clothes of some sort, I would go crazy if I paid any more attention. Based on that small sample size I would say they’re not out of it yet.
This seems to me to be cutting off their nose to spite their face. Amazon’s probably not really going to notice their departure from AWS, and they’re going to dig themselves into a hole for no reason.
I agree with PG. This is time and money that would have been far better spent in improving the Target website in an effort to woo shoppers away from Amazon.
Too much misplaced pride, not enough common sense.