Microsoft in recent weeks announced a corporate reorganization that makes the company more focused on cloud services and edge computing, as well as a plan to invest $5 billion in the internet of things over the next four years. Those actions are putting the company further into the orbit of the wireless industry.
Indeed, Microsoft’s latest actions could put the company squarely into competition with larger wireless operators like AT&T and Verizon, though in other cases it could position Microsoft to better supply products and services to wireless carriers as they sell connectivity.
“It’s a classic case of ‘frenemies.’ In some cases you’re partners and in some cases you’re competing,” explained Ovum analyst Daryl Schoolar (a FierceWireless contributor).
First, in Microsoft’s announcement late last month, the company said it would engage in a significant corporate reorganization in order to more fully focus on the “intelligent cloud and intelligent edge.” That reorganization appears to put Microsoft’s core Windows business into the background while the company focuses on areas including cloud, artificial intelligence and other high-tech areas.
“First, computing is more powerful and ubiquitous from the cloud to the edge. Second, AI capabilities are rapidly advancing across perception and cognition fueled by data and knowledge of the world. Third, physical and virtual worlds are coming together to create richer experiences that understand the context surrounding people, the things they use, the places they go, and their activities and relationships,” wrote Microsoft’s Satya Nadella in announcing the news.
Perhaps more relevant to wireless operators, though, was Microsoft’s pledge this week to dramatically expand its investment in the IoT; wireless operators across the world are hoping to boost flagging revenues from smartphones by connecting millions, and perhaps billions, of IoT devices ranging from wearables to farm equipment.
“Today, we’re planning to dedicate even more resources to research and innovation in IoT and what is ultimately evolving to be the new intelligent edge,” wrote Microsoft’s Julia White, with the company’s Azure cloud business, in a statement from the company. White didn't outline the details of Microsoft's planned $5 billion investment. “With our IoT platform spanning cloud, OS and devices, we are uniquely positioned to simplify the IoT journey so any customer—regardless of size, technical expertise, budget, industry or other factors—can create trusted, connected solutions that improve business and customer experiences, as well as the daily lives of people all over the world. The investment we’re announcing today will ensure we continue to meet all our customers’ needs both now and in the future.”
Already, Microsoft’s Azure-powered IoT business spans much of the higher-function IoT services that some wireless operators are working to sell, such as device management through connections including Wi-Fi, 3G and LTE. And Microsoft is already heavily investing in IoT edge computing services; last year, for example, the company announced its “Microsoft Azure IoT Edge” that helps bring the company’s Azure computing capabilities closer to customer devices. That’s the same kind of edge computing wireless operators like AT&T and others are investing in to ensure faster and more reliable IoT services.
In some cases, it’s clear that Microsoft’s efforts are positioning the company to more closely partner with wireless carriers. Indeed, Telefónica in Spain this week announced it would integrate its IoT connectivity platform with Microsoft Azure IoT Suite, thus allowing Telefónica to offer its customers “a global IoT Managed Connectivity Solution that helps Telefónica’s customers to easily, securely and reliably connect their IoT devices to Azure IoT Hub,” the carrier said.
However, as noted by Ovum’s Schoolar, in other situations, Microsoft’s IoT investments could relegate wireless carriers to a provider of IoT connections only, thus cutting out carriers from the more valuable IoT services part of the equation. And it’s clear that some wireless carriers are keen to sell IoT platforms and services beyond simple connectivity: consider AT&T’s IoT Platform and Verizon’s ThingSpace.
“Connected Devices includes data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems,” AT&T wrote in its 2017 annual report (PDF). “Connected device subscribers increased 23.4% during 2017 and 20.5% in 2016. During 2017, we added approximately 6.4 million wholesale connected cars through agreements with various carmakers, and experienced strong growth in other IoT connections as well. We believe that these connected car agreements give us the opportunity to create future retail relationships with the car owners.”
Of course, Microsoft isn’t alone in boosting its investment in the IoT. Google, Cisco and other major tech companies are also working to sell IoT management offerings on top of connectivity.