Microsoft MSFT is focused on making the most of 5G networking capabilities to transform cloud and edge computing. The tech giant is working in collaboration with the telecommunications industry to develop a carrier-grade platform for edge and cloud –– Azure for Operators.
The company aims to aid operators in securing networks, lowering infrastructure costs, and creating revenue opportunities via new business models.
Microsoft Azure, on edge or in the cloud, and AI and machine learning (ML) capabilities will assist telco operators to automate business processes and create service differentiation.
The company also aims to support operators to evolve infrastructure and operations by leveraging software-defined networking, network function virtualization, and service-based architecture technologies.
Besides, synergies from Metaswitch and Affirmed Networks buyouts combined with capabilities of Azure Cognitive Services, Azure Machine Learning, Azure IoT Central and Azure IoT will enable operators in simplifying operations, designing new services to monetize the network, and obtaining greater insights and mapping evolving customer preferences.
The introduction of Azure for Operators is anticipated to aid Azure in providing customers with robust 5G edge computing offerings, which is the need of the hour. Markedly, the coronavirus crisis has led to remote working wave. Moreover, shelter-in-place guidelines induced self-isolation and social distancing is driving demand for networking at the edge and data center.
This is expected to generate incremental adoption of Azure among telecom companies, which augurs well for Microsoft. Notably, the company currently carries a Zacks Rank #3 (Hold).
Microsoft to Gain Competitive Edge in Cloud Market
Microsoft’s cloud peers, including Amazon AMZN, Alphabet’s GOOGL Google and International Business Machines Corporation IBM aren’t far behind when it comes to strengthening their presence in the growing edge computing market, backed by 5G transition.
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Per data by Grand View Research, the global edge computing space is expected to hit $43.4 billion by 2027 at a CAGR of 37.4%.
Google Cloud rolled out Anthos for Telecom solution in early March, in a bid to enhance its presence in the 5G edge computing space. The aim is to aid telecom companies in monetizing their 5G network services by leveraging the edge computing capabilities of the Google Cloud platform.
Moreover, its strategic alliance with AT&T T remains noteworthy. Google Cloud aims to leverage AT&T’s 5G network to build a suite of business products, which will offer low latency and strong security to the companies. Alphabet currently carries a Zacks Rank #3.
Markedly, IBM is leveraging Red Hat’s OpenShift platform to develop solutions like IBM Telco Network Cloud Manager, which will aid telecom operators in modernizing their networks and improve efficiency. Notably, IBM’s solutions have already been adopted by Bharti Airtel to build its open cloud network to support 5G operations in India.
IBM, currently carrying a Zacks Rank #3, is also collaborating with Samsung and telecom operator M1 to develop and test Industry 4.0 solutions utilizing 5G and edge computing for Singapore's Infocomm Media Development Authority (IMDA).
Meanwhile, Amazon Web Services (AWS) is gaining from growing clout of AWS Wavelength, which is a combination of AWS compute and storage services and cutting edge 5G networks.
AWS Wavelength is an infrastructure offering that has been optimized for mobile edge computing applications. Wavelength zones are infrastructure deployments that embed AWS compute and storage services within communication service providers’ data centers at the edge of the 5G network. This reduces the round-trip data needs to travel, enabling customers to take full advantage of the latency and bandwidth benefits offered by 5G networks.
In fact, Verizon Communications VZ, together with AWS, recently added three more 5G mobile edge computing (MEC) cities — Atlanta, New York City and Washington, DC — bringing the total to five. Last month, the companies introduced the MEC platform in Boston and San Francisco Bay Area and are committed to launching in more cities by the end of 2020.
This partnership will aid Amazon, currently carrying a Zacks Rank #1 (Strong Buy), in making AWS Wavelength available across the United States. Additionally, the company has teamed up with Vodafone, SK Telecom, and KDDI to make the service available in Europe, South Korea, and Japan by 2020. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nevertheless, Microsoft’s deepening focus toward strengthening cloud offerings is likely to strengthen its market position in the cloud computing market.
Markedly, per a Canalys report, for second-quarter 2020, Microsoft’s market share in the cloud services space increased to 20% from 18% in the prior-year quarter. AWS market share remained unchanged at 31% for second-quarter 2020 on a year-over-year basis.
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