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Microsoft (MSFT) Azure Cloud Chosen by AT&T to Run 5G Network

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Microsoft (MSFT - Free Report) recently revealed that wireless service provider AT&T (T - Free Report) is migrating its 5G mobile network to Azure cloud platform.

AT&T is looking to expand its network services to cater to the changing preferences of consumers as well as bolster operational efficiency by moving workloads to the Azure for Operators platform.

As part of the collaboration, Microsoft is purchasing AT&T’s carrier-grade Network Cloud platform technology and as well as AT&T engineering and lifecycle management software for an undisclosed sum.

 

Microsoft noted that AT&T’s 5G core network is being powered by Network Cloud platform technology since 2018. AT&T launched its 5G services in 2018.

Microsoft will take care of software development and implementation of AT&T’s Network Cloud with immediate effect. Over the next three years, the company will be moving entire AT&T’s network cloud to Azure platform.

The engineering team pertaining to AT&T’s Network Cloud platform technology division will be provided recruitment offers from Microsoft.

Behind Microsoft’s Aggressive Push in the Cloud Space

Migration to cloud has been accelerated by the pandemic triggered remote work and telehealth trends. Further, rapid proliferation of innovative technologies like machine learnings (ML), Artificial Intelligence (AI), Big Data and data analytics is aiding the market expansion.

Cloud migration offers several benefits like improved scalability, cost savings and disaster recovery management. Per a Fortune Business Insights report, the global cloud computing market is forecast to grow at a CAGR of 17.9% between 2021 and 2028 and reach $791.48 billion.

Moreover, worldwide telecom cloud market is projected to witness a CAGR of 21.4% between 2021 and 2026 according to data from MarketsAndMarkets. Massive surge in demand for data, and broadband services due to pandemic-led work from home and online learning wave is a key catalyst driving the market.

Operators are shifting network workloads to cloud to gain advantages like access to cloud-powered data analytics and automation, as well as assist in delivering responses in real-time. Further, by migrating to cloud, operators can save on hardware development costs as well as speed up delivery of new services and products by leveraging cloud-run innovative technologies like Internet of Things (IoT) and Artificial Intelligence (AI), noted Microsoft.

Further, a report from GSMA projects that telecom operators are likely to spend $900 billion as capital expenditures with majority of it directed toward 5G between 2021 and 2025.

These projections bode well for Microsoft which is one of the leading players in the cloud space along with Amazon’s (AMZN - Free Report) Amazon Web Services (“AWS”).

The strategic partnership with AT&T augurs well for Microsoft, which is trying to boost its cloud-based telecom solutions’ portfolio.  Azure for Operators platform is Microsoft’s primary telecom solution that is designed to enable global network operators to provide secure and reliable 5G services to their subscribers while keeping costs in check.

Nevertheless, Microsoft needs to watch out for intense competition in the cloud space including the likes of Alphabet’s (GOOGL - Free Report) Google Cloud, Oracle, IBM, Alibaba, and Tencent, which are ramping up their efforts to grab a larger share of this prospering market.

At present, Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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