Microsoft Intends to Become The Alternative to Telecom Infrastructure with the Metaswitch Acquisition
Microsoft announced that it will acquire Metaswitch, a telecom core software company with deep expertise in IMS Core, automation, containers and cloud-native telecom systems. The acquisition will complement Microsoft's previously-announced acquisition (April 2020) of packet core and IoT software specialist, Affirmed Networks. Microsoft is positioning itself to become a viable alternative to in-house-built telecommunications core networks. The company says that by running core functions on Azure, operators will be able deliver services to customers at lower capital and operating costs.
The company said it plans to continue to engage with existing suppliers and network equipment partners to share roadmaps and explore expanded opportunities to work together, including in technologies such as radio, 5G Core, orchestration and OSS/BSS. Historically, Metaswitch has worked collaboratively with many companies that offer such software and hardware, so we think Microsoft is saying that this constructive relationship may continue. But, we wonder, could it be that Microsoft intends to further bolster its capabilities to potentially include radio and OSS/BSS after successfully working with these kinds of companies for a period of time.
It is clear that Microsoft is interested in serving the communications needs of customers. It recently announced it will re-sell CBRS managed services from Federated Wireless, for instance. Without question, collaboration services such as Teams have been very popular, and quite different from the types of services that have traditionally been offered by telecom operators. To complement its own services, Verizon acquired a Teams competitor called BlueJeans Networks; however there are many opportunities for Microsoft to partner with other telcos. It is deals like the AT&T / Microsoft Edge services announcement last summer that get us thinking that Microsoft has very big plans for collaborative working relationships with the telecom industry, extending its own offerings to telecom customers.
By gobbling up software companies like Metaswitch and Affirmed, and offering these technologies both as software-at-telco (premises-based) or as cloud-based software (Cloud/SaaS), you can argue Microsoft will be an ideal telco partner, offering capital efficient choice, with the two added kickers: a- services may be deployed more rapidly if cloud-delivered services are chosen, and b-that Microsoft services (Microsoft365, AI, Teams, Azure and so much more) can be easily integrated into a telco's offerings.