In the last three months, Microsoft has been on a tear building out its portfolio of 5G core and virtualized network service management technologies having acquired Affirmed Networks, and most recently, Metaswitch. The acquisition of these telecom tech companies by the leading enterprise IT technology company and cloud service provider may seem curious at first, but these transactions highlight the acceleration of a transformative trend that we at neXt Curve dubbed Under-the-Bottom (UTB) in our 2019 technology horizon study for Ofcom, the United Kingdom’s communications and media sector regulator.
What is UTB? It is a fast-emerging adjacent market play by IT technology and cloud service providers targeting the transformative telecommunications sector market opportunity that is 5G. Much in the way that Netflix has led an ongoing OTT (Over-the-Top) revolution that continues to upturn the media and telecommunications industries, some of the same OTT players such as Facebook, Google have pioneered the UTB movement with their early forays into the communications game such as TIP (Telecommunications Infrastructure Project) and Google Fiber. This attack-from-the-bottom threatens to dismantle the status quo of the ICT industry and reconstitute it in the image of the cloud.
The UTB snowball is starting to accelerate down the hill with Microsoft’s recent 5G-related acquisitions. The recent moves may have been inspired by the Trump Administration’s push to have a domestic response to a perceived Huawei 5G threat. It could also be due to the impact of the COVID-19 pandemic on the struggling telco tech sector creating buying opportunities that large UTB players and relatively new entrants such as Microsoft can’t resist.
With Metaswitch, Microsoft acquires a portfolio of data, voice and unified communications platforms and tools that position them well for making deeper inroads into the 5G transformation of their telecommunications customers and edge computing partners. Good timing considering that mobile network operators will be begin adopting Standalone 5G NR more broadly this year and beyond.
Regardless of the motivation, the acquisition of Metaswitch and Affirmed Networks positions Microsoft well in developing a comprehensive suite of software for 5G edge computing that will drive the integration of IT and CT cloud technologies. Metaswitch’s 5G core offering provides Microsoft with a critical piece needed to realize a cloud-native edge computing platform that will converge the edge cloud and the telco cloud.
In contrast, Google with their Global Mobile Edge Cloud and AWS with Wavelength are sticking closer to their traditional cloud roots by providing an edge cloud overlay on top of a carrier-hosted 5G network, which is more of an edge computing OTT play. Google and AWS have also struck SaaS partnerships with leading OSS/BSS software providers to host their software as a service for telco customers, fast-following Microsoft’s collaboration with Amdocs back in 2018 to enable ONAP on Azure. Coincidentally, Microsoft recently entered into an agreement with Netcracker to offer their Digital BSS/OSS and Orchestration applications integrated with Azure Machine Learning and AI services.
Microsoft’s “hyperconverged cloud” approach should position them well to engage with their telco partners in a deeper way than their cloud competitors through the integration of edge cloud and telco cloud software and tools. This will be important as the need for holistically orchestrated compute and network services, and new development and DevOps tooling become apparent as the 5G edge cloud evolves and E2E (End-to-End) network slicing implementations come into vogue.
As an edge cloud service provider, Microsoft will have the unique position among cloud service providers and tech companies of having an almost complete suite of IT and CT software technologies and tools. This is a big deal given Microsoft’s comparative strength in the enterprise versus GCP, and arguably AWS, for software and cloud services.
Let’s not forget Microsoft’s sizeable gaming business on the consumer side. The smartphone aside, Windows is the mainstay of personal computing. By moving their converged IT/CT stack and integrated tools out to the edge, Microsoft will have a solid footprint for their platforms and services across the cloud continuum that stretches from the hyperscale Azure cloud to devices connected across the edge of the network.
Microsoft’s acquisition of Affirmed Networks and Metaswitch should set off alarm bells in the halls of Nokia, Ericsson and even Huawei. It should also prompt Google and AWS to reassess their own edge strategy and UTB play. The future of CT is software as open source initiatives such as O-RAN and OpenRAN egg on the inevitable commoditization of network hardware. Microsoft could become a significant threat to the big network equipment providers in a future in which you win with software.
For more insights on neXt Curve’s Converged IT/CT and 5G Evolution research theme, contact us for a detailed briefing with one of our analysts. Follow our site to get updates and notifications of our research and our 2020 research agenda.
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Managing Director, neXt Curve
May 15, 2020
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