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Microsoft (MSFT) Extends Collaboration With Deutsche Telekom

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Microsoft Corporation (MSFT - Free Report) extended its collaboration with Deutsche Telekom to assist business organizations (especially enterprise and midmarket) to ramp up their cloud migration initiatives. Deutsche Telekom is a Germany-based telecommunications company that boasts 235.8 million mobile customers.

As part of the collaboration, Microsoft will be integrating its cloud and AI capabilities with Deutsche Telekom’s Cloud Migration Framework and telecommunications services. The companies further stated that Microsoft’s Azure cloud platform will be the “preferred cloud platform for select solution areas” for T-Systems, which is the enterprise customer segment of Deutsche Telekom.

Also, Deutsche Telekom added that Azure plays a pivotal role in its strategy of migrating most of its internal IT workload to public cloud by 2025.

 

Deutsche Telekom will enable its customers to use Azure ExpressRoute to gain swift access to Microsoft cloud. Connecting to Microsoft cloud via Azure ExpressRoute will provide customers with increased connectivity and compliance to data residency requirements as the need for public internet is eliminated.

Deutsche Telekom will also be offering Microsoft 365, including Teams Apps to foster improved connectivity and productivity. The company will assist in migrating SAP workloads of its clients to Azure cloud platform.

Cloud Migration Spells Lucrative Opportunity

Enterprises across the globe have been shifting away from on-premise systems and migrating their workloads to cloud due to benefits like increased IT cost savings as well as scalability and easier disaster recovery management.

Per a Mordor Intelligence Report, cloud migration services market is projected to witness a CAGR of 28.89% between 2020 and 2025 and reach $448.34 billion.

The cloud migration trend received a further boost due to the COVID-19 crisis and the subsequent stay-at-home and work-from-home as well as telehealth services trends.

Worldwide spending on cloud services will reach more than $1 trillion by 2024 at a  CAGR of 15.7% between 2020 and 2024, per an IDC report.

Though vaccines are approved to be administered to the general populace, the logistical challenges of vaccinating the whole population is likely to make this a time consuming process. This, in turn, is likely to keep people indoors.

As a result, these remote work and online learning trends are unlikely to dissipate in the near term.

These projections bode well for Microsoft’s Azure platform, which is one of the leading players in the cloud domain along with Amazon’s (AMZN - Free Report) Amazon Cloud Service.

Per a Canalys report, Azure cloud’s global market share in the third quarter of 2020 trailed only Amazon Web Services (AWS) share. Azure’s share stood at 19%, while AWS share was an impressive 32%. 

The cloud infrastructure services’ market witnessed an impressive 33% year over year improvement to reach $36.5 billion in revenues for the third quarter, added the report.

Zacks Rank and Other Key Picks

At present, Microsoft carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader sector are Qorvo (QRVO - Free Report) and Avnet (AVT - Free Report) . Both the stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Qorvo and Avnet is currently pegged at 15.8% and 19%, respectively.

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