The Cloud: where your budget goes to ascend
Summary
To provide some brief context for those who may have missed this, leaked details at Microsoft’s Build developer conference just over a week ago revealed that Walmart spent ~$580M on Microsoft’s Azure cloud platform between June 2023–May 2024.
What the Leak Revealed
- Source: Microsoft Build conference leak.
- Azure spend breakdown: ~$580M/year.
- Monthly peak: $61.9M in Nov 2023.
Anyone who has worked with a public cloud platform in the last decade or so will already be aware that cloud rarely means lower IT costs for the business. This is particularly true if you fail to heed the warnings around ‘Lift & Shift’ migrations and fail to modernise and or adapt your systems, applications and processes to align with the most optimal methods of running workloads up there.
The most staggering aspect about that figure - for just a single year of Azure services remember - is that Walmart has very deliberately not gone all-in with a single cloud provider1 so this Azure bill likely does not relfect their entire cloud spend for those 12 months. Furthermore, they haven’t fully committed to public cloud hosting ni general and still retains a significant amount of in-house infrastructure.
So, just for amusement, lets take a look at some finger-in-the-air estimates at how this bill might compare to the costs of running traditional on-premises infrastructure.2
🏭 Section 2: Estimating an On-Prem Alternative
- Scenario: Equivalent compute/storage/networking for large enterprise workloads.
- Assumptions: 500 servers, 1PB storage, typical enterprise networking.
| Component | Estimate |
|---|---|
| Compute (500 servers) | $7.5M |
| Storage (1PB) | $2.0M |
| Networking Gear | $4.2M |
| Annual OPEX (Power, cooling, staffing) | $8.13M |
| Licensing & Software | $2.0M |
| Total (Year 1) | ~$23.83M |
💵 Section 3: Comparing the Costs
Visual Comparison Chart:
| Azure (Walmart) | On-Prem (Est.) | |
|---|---|---|
| Annual Cost | $580M | ~$24M |
| CapEx Burden | Low (pay-as-you-go) | High (hardware) |
| Scalability | Near-infinite | Fixed, limited |
| Agility | High | Medium |
| Maintenance | Managed by Azure | Self-managed |
| Control | Limited | Full |
| Total Ownership | Subscription-based | Asset-based |
🤔 Section 4: Why the Cloud Still Makes Sense
- Speed to market, AI/ML services, serverless apps
- Enterprise contracts include more than just raw compute (e.g., analytics, DR, global presence)
- Strategic alignment with Microsoft ecosystem (Office 365, Copilot, etc.)
📉 Section 5: Is Cloud Repatriation Inevitable?
- Are enterprises reconsidering cloud? (e.g., Dropbox, 37Signals)
- Hybrid cloud strategies rising
- Cloud for scale + on-prem for efficiency
✅ Conclusion
- Walmart’s Azure spend is jaw-dropping, but not unjustified.
- On-prem is cheaper in raw numbers, but lacks many cloud benefits.
- Enterprises must balance control vs. convenience, CapEx vs. OpEx, and scale vs. stability.
Footnotes
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