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The pair intend to spin off an IoT business this year
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Vodafone will migrate 46,000 servers from Vodafone’s data centers to Microsoft Azure
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The deal makes "strategic sense" according to Roy Chua of AvidThink
Vodafone has signed the techco deal of the year — so far! — with Microsoft.
The $1.5 billion deal will see the operator spin-out its Internet of Things (IoT) business by April this year with both firms investing in the new operation. The operator also said it will invest in Redmond’s Azure cloud platform and customer-focused artificial intelligence (AI) over the next decade.
Through the deal, Vodafone will grow its enterprise business with new Microsoft services for small and medium-sized businesses in Europe and Africa. The companies also said they will migrate 46,000 servers from Vodafone’s data centers to Microsoft Azure.
But wait! There's more! The partnership will also expand M-Pesa — Vodafone's mobile money service — by housing it on Azure and enabling the launch of new cloud-native applications. Vodafone said this will “improve financial inclusion” in Africa.
Plus, Microsoft said it will use Vodafone’s connectivity services in return.
The deal makes “strategic sense in that telcos need to tie up with cloud partners to help transform their own operations and find new areas of growth,” Roy Chua, analyst at AvidThink, told Silverlinings in an email.
“Access to Copilot and leveraging Microsoft's AI/OpenAI capabilities is a natural area of collaboration,” he said, as many enterprises, vendors and operators try and put customer service entirely into the realm of AI.
“Likewise, bringing Microsoft collaboration and workplace technologies to SMEs helps Microsoft expand their distribution and gives Vodafone value-add services on top of connectivity,” Chua added. “[While] data center migration of 47,000 servers to Azure is part of efficiency and scaling moves and to be expected as telcos focus on their core areas of competency.”
Vodafone already said it supports 162 million IoT connections in 190 countries and is one of the leading global cellular IoT players already. It mainly operates narrowband and 4G IoT networks currently.
“With Microsoft's familiarity and experience with their own Azure IoT platform that many enterprises have embraced, the joint venture should help transform a telco-centric offering to a more cloud-centric offering complete with more flexible APIs and perhaps an expansion of a developer ecosystem,” Chua said.
It could possibly encourage Vodafone and Microsoft to deploy RedCap 5G IoT networks as well. That, however, is still in the future for the partnership.