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Microsoft Inks Mega Deal With India's Jio

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Microsoft (MSFT - Free Report) has signed a 10-year deal with India’s largest telecom company Reliance Jio Infocomm Ltd., a subsidiary of Reliance Industries Limited. The companies will work together to create the digital framework for small, medium and large-scale companies in the country, facilitating their move to the cloud.

The deal is significant because of the government’s goal of bringing India to the digital age, particularly with respect to data analytics, artificial intelligence, cognitive services, blockchain, IoT and edge computing, spurring technology-led GDP growth. Reliance, with its 331 million subscribers and extensive 4G network, represents the kind of assets that would further the government’s plans.

For Microsoft, this is a very big deal because it will result in large-scale adoption of its collaborative solutions in connectivity, computing, storage and other technology services:

First, Reliance will internally adopt Microsoft cloud technology through Office 365 while migrating its non-network applications to Azure.

Second, Reliance will try to get its startup customers on Microsoft Azure right from the get-go.

Third, Reliance will develop cloud-based applications and services on Azure that it will distribute to its startup, SMB and large-scale customers.

Fourth, Microsoft’s natural language (all major Indian languages and some dialects)-based technological solutions and computer vision technologies will be adopted by Reliance to facilitate rapid adoption.

Gartner says that India’s public cloud market will grow 24.3% from a very small base to generate revenues of $2.4 billion in 2019. Sid Nag, research vice president at Gartner attributes the increased corporate investment to a shift from ‘cloud first’ to a ‘cloud only’ model as seen from their disinvestments in new data centers. This is precisely the trend that the partnership will cater to in the startup community.

And speaking of data centers, Jio will set up data centers with next-generation compute, storage and networking capabilities that Microsoft will use to host its Azure cloud platform. The first two of these, in Gujarat and Maharashtra, will be fully operational next year. This will help the localization of data belonging to Indians, something that the government has become more serious about, in line with global trends.

 “We have an incredible opportunity to apply advances in technology to help organizations across India innovate and grow,” said Nadella. “The combination of Jio’s leading connectivity and digital solutions with Azure, Azure AI and Office 365 will bring powerful tools and platforms for compute, storage, productivity and more to millions of businesses in the country.”

“Jio is delighted to partner with Microsoft in our efforts to further deepen the use of technology on scale to all Indians,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries. “This is a unique and first–of–its–kind partnership that brings the capabilities of two large companies focused on creating significant value to Indian enterprises — small and large. By working together to develop innovative and affordable cloud-enabled digital solutions built around Jio’s world-class digital infrastructure and Microsoft’s Azure cloud platform, we will accelerate the digitization of the Indian economy and make Indian businesses globally competitive. This will be a showcase to the world to demonstrate tech-enabled value creation that is both exponential and inclusive.”  

Last Word

This of course doesn’t mean that Microsoft will immediately become the leading cloud infrastructure player in India, given Amazon’s (AMZN - Free Report) early start and the broad acceptability of Alphabet’s (GOOGL - Free Report) Google. But it positions Microsoft really well for very strong growth in the emerging Indian market that could at least make it one of the leading players.

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Microsoft shares carry a Zacks Rank #2 (Buy). Other buy-rated stocks in the space include Progress Software Corporation (PRGS - Free Report) , Smith Micro Software (SMSI - Free Report) , Cadence Design Systems (CDNS - Free Report) and Cornerstone OnDemand (CSOD - Free Report) . For other picks see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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