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Walmart’s technology center in Austin, Tex., will be home to the first group of Microsoft engineers working on cloud services with the retail giant. (Walmart Photo)

Two of Amazon’s strongest rivals are planning to start formally working together on cloud services early next year deep in the heart of Texas.

Walmart’s existing technology center in Austin, Tex. will be expanded to include a section dedicated to 30 engineers from both companies who will be working on cloud services around the internet of things and IT modernization, Microsoft said Monday in a blog post. The move builds on a partnership struck between Amazon’s two least favorite companies earlier this year to work on cloud services for retail companies wary about working with Amazon Web Services.

But it’s not just the common enemy that has motivated Walmart and Microsoft Azure to work together. Microsoft has spent a lot of effort this year positioning itself as the cloud provider for industrial internet and smart building developers, and Walmart’s vast network of big-box stores presents quite a laboratory for experiments to develop new products and services. A similar trend likely played a part in Amazon’s decision to acquire Whole Foods last year.

The Austin group will also work on migrating older business applications to follow new cloud-native philosophies, which the companies believe will help Walmart save money on legacy equipment and infrastructure. Walmart has also invested in its own infrastructure for certain workloads, but like many companies this year, seems to have decided that a hybrid cloud approach split between Azure and its own servers.

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