Azure for Operators – What does it mean for Service Providers?

Yesterday Microsoft announced the launch of Azure for Operators. This is the start of Microsoft bringing together a series of virtualised network functions and other applications into the Azure cloud in order for Service Providers to take advantage of them. The ambition may initially be for 5G and some traditional voice services, but seems a lot broader moving forward. Below is the diagram that showed how Microsoft positioned the different assets they have in the Ecosystem which may be exposed in time to come.

Source: https://azure.microsoft.com/en-us/blog/microsoft-partners-with-the-telecommunications-industry-to-roll-out-5g-and-more/

On one hand, you could say this is Microsoft just reacting to the increased trend of service providers looking to move more and more to the cloud, both in the SPs own operations and in the service’s it provides to its customers.  This is therefore just a reaction to this trend and the progress AWS & Google have also made in securing business from the service providers and related technology vendors. Microsoft acknowledging that SPs could be an important customer and route to market in the Hyperscale wars.

I guess also this is another signal that Microsoft appears to be trying to convince service providers that they are a force for good, and not a leading competitor. Our latest research of cloud communications service providers showed that Microsoft was perceived as their biggest competitor and this perception has grown in the last 12 months. So maybe this very clear step in offering “focused” operator services will go some way to address these concerns.  What it also does is help clearly position the reason that they purchased Affirmed Networks and Metaswitch Networks to help build some fundamental pillars of these services.

So, in essence Microsoft’s long-term proposition to service providers is to host your virtualised network elements and for you to consume some of your key applications, from the Azure cloud and you will benefit from an ability to:

  • Provide global scale and ability to deliver in multiple countries
  • Ability to integrate into other relevant services that are also in the Azure cloud (AI< ML etc.)
  • Save OPEX and CAPEX as some of the physical network elements will no longer be needed and you can consume them virtually on a pay as you go basis.
  • Ability to be integrate with other Microsoft applications and services which are present in the AZURE cloud.
  • Take up a commercial and operating model tailored to SPs

What will be interesting is what elements and applications will be offered as we move forward. Also one of the criticisms of Microsoft has been its ability to provide an appropriate service wrap and commercials that are attractive to SPs, so it will be interesting to see how this emerges. At launch Microsoft mentioned – on the voice side – use cases for; Voicemail, Global Interconnect and Enterprise voice but it’s clear many others will come.

So, service providers will be considering their ability to compete and differentiate in the future, and therefore what elements of their services do they want to move to the cloud and what applications do they still want to manage and run whether in the public or private cloud. 

They will also be considering the benefits of Microsoft, AWS, or Google as key partners in this process, as well as many of the traditional vendors who have been virtualising their own services like; Ribbon, AudioCodes, Oracle, Nokia, and Eriksson etc.

I believe this is a very interesting move from Microsoft, and certainly it will impact some sectors and vendors immediately. I think it will take some time for service providers to realise the value from developing new services and for Microsoft to align its business to demonstrate clear value from new services, and the integration into other Microsoft assets.

I do think however this could have immediate impact on areas such as Global Voice Interconnect as the combination of Metaswitch and Azure’s global scale, affects vendors and SPs in that field.  Interestingly provision of voicemail was also shown as an initial use case, this is a product that causes SPs problems in supporting legacy services, so cloudifying may provide a compelling short term OPEX and CAPEX benefit.

I think this is certainly going to impact the market, I will be looking at the commercial service models and more use cases that show the benefit of integration with other Azure services before I am clear how important this will be.

You have to believe that some of the vendors and providers who are providing wholesale voice interconnect services are going to be affected.

Also a key consideration will be the margin they can generate currently and how that changes in this model.  A number of SPs have depreciated assets in the delivery of certain services alongside the rising OPEX costs to support legacy environments.

On the 13th of October at 4pm BST, we’ll be running a free webinar covering more of our points of view on the topic, for which you are welcome to register by clicking on the button below:

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