Making Sense of the Telco Cloud

In recent years the cloudification of communication networks, or “telco cloud” has become a byword for telecom modernisation. This Telecoms.com Intelligence Monthly Briefing aims to analyse what telcos’ transition to cloud means to the stakeholders in the telecom and cloud ecosystems. Before exploring the nooks and crannies of telco cloud, however, it is worthwhile first taking an elevated view of cloud native in general. On one hand, telco cloud is a subset of the overall cloud native landscape, on the other, telco cloud almost sounds an oxymoron. Telecom operator’s monolithic networks and cloud architecture are often seen as two different species, but such impressions are wrong.

(Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look into how telco cloud has changing both the industry landscape and operator strategies.

The full version of the report is available for free to download here.)

What cloud native is, and why we need it

“Cloud native” have been buzz words for a couple of years though often, like with many other buzz words, different people mean many different things when they use the same term. As the authors of a recently published Microsoft ebook quipped, ask ten colleagues to define cloud native, and there’s good chance you’ll get eight different answers. (Rob Vettor, Steve “ardalis” Smith: Architecting Cloud Native .NET Applications for Azure, preview edition, April 2020)

Here are a couple of “cloud native” definitions that more or less agree with each other, though with different stresses.

The Cloud Native Computing Foundation (CNCF), an industry organisation with over 500 member organisations from different sectors of the industry, defines cloud native as “computing (that) uses an open source software stack to deploy applications as microservices, packaging each part into its own container, and dynamically orchestrating those containers to optimize resource utilization.”

Gabriel Brown, an analyst from Heavy Reading, has a largely similar definition for cloud native, though he puts it more succinctly. For him, cloud native means “containerized micro-services deployed on bare metal and managed by Kubernetes”, the de facto standard of container management.

Although cloud native has a strong inclination towards containers, or containerised services, it is not just about containers. An important element of cloud native computing is in its deployment mode using DevOps. This is duly stressed by Omdia, a research firm, which prescribes cloud native as “the first foundation is to use agile methodologies in development, building on this with DevOps adoption across IT and, ideally, in the organization as well, and using microservices software architecture, with deployment on the cloud (wherever it is, on-premises or public).”

Some would argue the continuous nature of DevOps is as important to cloud native as the infrastructure and containerised services. Red Hat, an IBM subsidiary and one of the leading cloud native vendors and champions for DevOps practices, sees cloud native in a number of common themes including “heavily virtualized, software-defined, highly resilient infrastructure, allowing telcos to add services more quickly and centrally manage their resources.”

These themes are aligned with the understanding of cloud native by Telecoms.com Intelligence, and this report will discuss cloud native and telco cloud along this line. (A full Q&A with Azhar Sayeed, Chief Architect, Service Provider at Red Hat can be found at the end of this report).

The main benefits of cloud native computing are speed, agility, and scalability. As CNCF spells it out, “cloud native technologies empower organizations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds. Containers, service meshes, microservices, immutable infrastructure, and declarative APIs exemplify this approach. These techniques enable loosely coupled systems that are resilient, manageable, and observable. Combined with robust automation, they allow engineers to make high-impact changes frequently and predictably with minimal toil.”

To adapt such thinking to the telecom industry, the gains from migrating to cloud native are primarily a reflection of, and driven by, the increasing convergence between network and IT domains. The first candidate domain that cloud technology can vastly improve on, and to a certain degree replace the heavy infrastructure, is the support for the telcos’ own IT systems, including the network facing Operational Support Systems and customer facing Business Support System (OSS and BSS).

But IT cloud alone is far from what telcos can benefit from the migration to cloud native. The rest of this report will discuss how telcos can and do embark on the journey to cloud native, as a means to deliver true business benefits through improved speed, agility, and scalability to their own networks and their customers.

The rest of the report include these sections:

  • The many stratifications of telco cloud
  • Clouds gathering on telcos
  • What we can expect to see on the telco cloud skyline
  • Telco cloud openness leads to agility and savings — Q&A with Azhar Sayeed, Chief Architect, Service Provider, Red Hat
  • Additional Resources

The full version of the report is available for free to download here.

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


Reports suggest the BT empire is beginning to crumble

No-one in the UK should be in the same league as BT, but poorly executed strategy has kept rivals within touching distance and now the foundations are reportedly being sold off.

Read the full story here


Microsoft doubles down on the telco cloud with Metaswitch acquisition

Don’t say you weren’t warned, telecoms industry. The tech big guns are trained on your home turf and they’re not afraid to splash the cash.

Read the full story here


Huawei threatened to pull investment from Denmark in response to new screening law

The head of Huawei Denmark sent a letter to the Danish Prime Minister indicating it would rethink its involvement with the country if special security requirements were imposed on it.

Read the full story here


Return to work messages start to appear as Twitter hands power to employees

One of the questions which has lingered over the last few weeks is whether the COVID-19 enforced digital transformation will persist in the long-term, though the answer is becoming a bit clearer.

Read the full story here


ETSI gets to work on new contact tracing app standard

With countries across Europe all trying to reinvent the wheel with their own contact tracing apps, standardization is long overdue.

Read the full story here


Reliance Jio signs a third deal to add another $1.5bn to its bank account

Vista Equity Partners has become the third-largest investor in Reliance Platforms, purchasing a 2.32% equity stake in the disruptive business for $1.5 billion.

Read the full story here


 

Microsoft doubles down on the telco cloud with Metaswitch acquisition

Don’t say you weren’t warned, telecoms industry. The tech big guns are trained on your home turf and they’re not afraid to splash the cash.

Less than two months ago Microsoft bought into NFV by acquiring Affirmed Networks. Now it has doubled-down on that investment with the acquisition of Metaswitch Networks, which is also all about the virtual network, for an undisclosed sum.

“This announcement builds on our recent acquisition of Affirmed Networks, which closed on April 23, 2020,” explained the Microsoft blog on the matter. “Metaswitch’s complementary portfolio of ultra-high-performance, cloud-native communications software will expand our range of offerings available for the telecommunications industry. Microsoft intends to leverage the talent and technology of these two organizations, extending the Azure platform to both deploy and grow these capabilities at scale in a way that is secure, efficient and creates a sustainable ecosystem.

“As the industry moves to 5G, operators will have opportunities to advance the virtualization of their core networks and move forward on a path to an increasingly cloud-native future. Microsoft will continue to meet customers where they are, working together with the industry as operators and network equipment providers evolve their own operations.”

So it seems clear that Microsoft is pretty serious about the telco cloud. It already has some of the best cloud infrastructure in the world and it’s rapidly adding the software required to make it telecoms-friendly. Metaswitch is small, so this seems to be as much about talent as products. Either way Microsoft is rapidly building a telco cloud capability that specialist vendors can only dream about.

Will coronavirus compound the concentration of cloud computing champions?

With COVID-19 forcing more people to work and entertain themselves at home, the cloud segment has been profiting. But it is debatable as to whether these riches are being evenly spread.

Although many would presume cloud is now a mainstream concept in the business world, it still accounts for less than 5% of total IT budgets. It will of course never be 100%, but this is a remarkably low percentage for how many companies who boast about how forward-looking and innovative they actually are.

The coronavirus has not only forced a new social dynamic, but also coerced traditional organisations through digital transformation projects.

This is of course an opportunity for the cloud companies, but you have to question whether this bounty will be distributed across the market, or whether it will be concentrated at the top, extending the lead which the likes of AWS, Microsoft, Google and Alibaba have worked over the chasing peloton, featuring companies such as IBM, Rackspace and Oracle.

Will everyone benefit, or just the market leaders?

Cloud computing market share by period
Company Q1 2020 Q4 2019 Q1 2019
AWS 32% 32% 33%
Microsoft Azure 17% 18% 15%
Google Cloud 6% 6% 5%
Alibaba Cloud 6% 5% 5%
Other 38% 39% 42%

Source: Canalys

The data above suggests the cloud profits are being increasingly concentrated at the top. This data will not make a comfortable read for niche cloud companies, but there is always hope. One of COVID-19’s success stories has elected to go outside market leadership to scale its offering.

Despite poor security credentials, suspect ties to Chinese ownership and misleading statements made by the management team, Zoom is proving to be one of the bolters of 2020. Thanks to enforced work from home trends and keeping in touch with friends and family during lockdown, usage of Zoom’s video conferencing services is skyrocketing.

The more popular Zoom becomes, the more cloud capacity the business would need, and Oracle won the race to secure the popular video conferencing company as a customer. High value customers are of course very beneficial to the financial spreadsheets, but it provides more confidence for other potential customers to sign on also.

Interestingly enough, Oracle sits outside the leaders in the cloud computing segment. Most would have assumed Zoom would select one of AWS, Microsoft or Google to scale services, but in electing for Oracle perhaps this is evidence the fortunes of coerced digital transformation are being spread proportionally.

How this money is being distributed through the community is a bit unknown for the moment, though it is clear companies are being forced through a digital transformation project.

“Up to now, there has been a tendency to not be fully committed to cloud,” said Nicholas McQuire, SVP and Head of Enterprise Research at CCS Insight.

This is an issue in itself. As McQuire highlights, many companies are being forced to rush into decision making to ensure business continuity, but this might only be a short-term gain with a recession looming on the horizon.

As with every period of recession, belts are tightened as profits are protected. This can mean certain projects are cut back, or expenditure is rationalised. This could be a problem for the niche players in the cloud ecosystem, according to McQuire.

Multi-cloud will of course persist, but some companies may well sacrifice best-in-class purchases in pursuit of greater procurement value. For example, Microsoft and Google might look like very attractive cloud vendors as on top of the storage components, these companies can also offer productivity services such as desktop virtualisation.

“As a niche provider in a time of recession, you have to provide immediate business value above what is being offered elsewhere in the market,” said McQuire.

This may well prove to be a challenge for smaller players in the market, such as Rackspace or IBM, but it could prove to be an advantage for the likes of Microsoft, Google and AWS, all of which offer very broad services, across numerous business criteria. It could look very attractive to a company which is being forced through a digital transformation process at a time where profits are likely to be limited.

Interestingly enough, AWS might be a company to keep an eye on in this space. Amazon Chime, WorkDocs, and WorkSpaces are all productivity and collaboration tools offered by the company but are rarely pushed. During the most recent earnings call, they were all explicitly mentioned suggesting the productivity and collaboration could be an element of the Amazon war chest to get an upgrade during this period.

Looking at the financial statements of these companies, this is an assumption which is holding strong:

Quarterly financial gains for cloud giants
Revenues Year-on-year
AWS $10.2 billion 33%
Microsoft (Productivity) $11.7 billion 15%
Microsoft (Cloud) $12.3 billion 27%
Google Cloud $2.7 billion 52%

At Microsoft, Teams is a draw for decision makers on top of the Azure services, as would Dynamics, while the same could be said for Google and its G-Suite offering. The rationalisation process might help the big boys at the top of the pile, but with new companies entering the cloud space, familiarity might also help.

Companies like Oracle and Workday might enjoy success and capture newly created revenues as there are existing relationships in place with products such as Enterprise Resource Planning (ERP) and Human Capital Management (HCM). Companies who are not as cloud savvy as others already purchase this software and may well turn to their existing suppliers to help.

One final element to consider during this period is free offers.

Turning back to the Amazon earnings call, the team has said small businesses would be able to use certainly toolsets for free for a 12-month period. This is somewhat of a loss leader position to take, which will certainly be attractive to some decision makers. Major players might be able to offer such promotions due to diversity of revenue streams, bulging bank accounts and engaged investors, however niche players might be more reliant on cash moving through bank accounts.

It might not be the best way to win business, but the big players might just be able to undercut rivals at a loss and outwait the market.

More money in the cloud computing market might seem like a good thing on the surface but pay closer attention to where the money is actually going. AWS, Microsoft, Google and Alibaba have already worked a considerable lead over the chasing peloton of less successful cloud companies, though this could be extended if the fortunes are disproportionately directed towards the top.

Some might say this is due to tactical as opposed to strategic expenditure during a period where time is a luxury few decisions makers have when rapidly undertaking a digital transformation programme, but with the risk of supplier rationalisation on the horizon, it might not get any easier for the niche cloud players.

Microsoft gets a bump-up in numbers thanks to COVID-19

The coronavirus outbreak is causing chaos in the financial markets, but with every crisis there are those who will benefit financially; Microsoft appears to be one.

The Redmond-based internet giant has reported its latest quarterly results, and it appears the lockdown is becoming a catalyst for profits. Total revenues increased 15% over the three-month period ending March 31, operating income was up 25% to $13 billion and net income jumped 22% to $10.8 billion.

With share price growing 4.5% in the final hours of trading, and a further 2.6% during the pre-market hours, Microsoft’s market capitalisation is more than $1.35 trillion, making it the most valuable corporation worldwide.

“We’ve seen two years’ worth of digital transformation in two months,” said Microsoft CEO Satya Nadella.

“From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”

The coronavirus pandemic has forced families behind closed doors and employees to work from home. With lockdowns still in place in many of the worlds developed markets, new norms are bedding in and Microsoft is certainly one of those companies who will benefit.

Breakdown of Microsoft financial performance by business unit
Business unit Revenues Year-on-year
Productivity and Business Processes $11.7 billion 15%
Intelligent Cloud $12.3 billion 27%
More Personal Computing $11 billion 3%

Source: Microsoft Investor Relations

With more people working remotely, more businesses are being forced through a digital transformation process, and much more aggressively than most would have liked. To enable efficient work process, more cloud resources will have to be consumed by enterprise customers, though it is likely additional products will also be taken on in areas such as security.

For a company which has pivoted over the course of the last decade to position cloud front and centre of the business, current trends are incredibly beneficial.

For Microsoft, the revenues for the Azure cloud computing products surged 59% over the three months, while Teams now has more than 75 million daily active users, tripling over the last two months. 20 organizations with more than 100,000 employees are now using Teams, with new features being introduced each week. Live events for up to 100,000 attendees can now be streamed across the platform. Office 365 now has 258 million paid seats, while usage of Windows virtual desktop tripled this quarter.

But it is not just the enterprise-focused business units who are profiting.

Microsoft 365 Personal and Family now has more than 39 million subscribers, while Teams has been opened to consumer users for the first time. Windows 10 now has more than 1 billion monthly active devices, up 30% year-over-year, and Xbox has seen a boost also.

With children not being allowed to play outside in the garden and adults not allowed to play inside pubs, an obvious beneficiary was going to be the online entertainment segment. Netflix has already demonstrated financial gain with 27% uplift in revenues and a 22% boost in subscribers during its own earnings call, and Xbox has seen a similar lift.

Xbox Live currently has 19 million active users, while the Xbox Game Pass has more than 10 million subscribers. Although the team did not offer specifics when it came to the cloud gaming venture, Nadella said Project xCloud has “hundreds of thousands of users” in the beta stages in seven markets, with eight more launching over the next few weeks.

One question which does remain is whether this boost in revenues will be sustained?

“In our consumer business, we expect continued demand across Windows OEM, Surface and Gaming from the shift to remote work, play and learn from home,” said Microsoft CFO Amy Hood. “Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease.

“In our commercial business, our strong position in durable growth markets means we expect consistent execution on a large annuity base, with continued usage and consumption growth across our cloud offerings.”

The risk of this benefit is that everything returns to the pre-COVID-19 way of life. Offices gradually become re-populated and the lessons from remote working are forgotten by traditional organisations. This would mean the bump in revenues would not be sustained by the cloud companies.

Although we suspect some traditional organisations might return to pre-COVID-19 working practises, many will adopt at least a portion of the newly transformed way of life. The extremity of the current bounty for the cloud companies will not be sustained, but there should be a shift in mentality over the long-term.

We tend to agree with the cloud companies that this enforced digital transformation programme will bed-in, though perhaps not as enthusiastically as the cloud companies believe. These are salespeople let’s not forget, selling the potential of Microsoft to investors. There will be sustained benefits, but some in society will be intolerant of evolution, so will returns to the ways of old.

Microsoft to expand xCloud beta to Western Europe

After launching in the UK, US and South Korea, Microsoft has decided to rollout its services in an additional eleven markets.

Gaming has always been a staple in the Microsoft diet, thanks to Xbox and Game Studios in bygone years, but cloud gaming offers an opportunity to dramatically scale the business unit. This is a market development which could potentially lower the barrier of entry for consumers, as cloud services are less reliant on extortionately expensive consoles and upgrades. The rewards could be an expanded userbase and new revenues.

But Microsoft is not alone in pursuit of gaming fortunes. Google and Nvidia have their own platforms to challenge for the throne, while Sony and Nintendo lead numerous other firms chasing down the leaders. If Microsoft is to create a leadership position, it will have to be aggressive in its development and rollout of services.

The new markets for the beta are Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain and Sweden.

“Bringing the Project xCloud preview to gamers across Western Europe is a top priority for us,” said Catherine Gluckstein, GM for Project xCloud. “We know gaming is an important way for people to remain connected, particularly during these times of social distancing, but we also recognize how internet bandwidth has been impacted with strain on regional networks as large volumes of people responsibly stay home and go online.”

While it will not present as much of a problem for the network as popular streaming services, Gluckstein is right in that the team will have to be careful to ensure it is not placing undue strain on the networks. In Italy, Telecom Italia CEO Luigi Gubitosi partly attributed a 70% surge in traffic at the beginning of the Italian lockdown on gaming titles Fortnight and Call of Duty, where the online features are incredibly popular.

Although it is far too early to decide on who is winning the cloud gaming segment, consumer entertainment is an important area for Microsoft. Revenues across the last quarter declined for Xbox, though this was expected as a new console is ready to launch, but the team boasted of a new record for Xbox Live monthly active users and Xbox Game Pass subscribers more than doubled.

Recurring revenue is the Golden Goose for the digital economy and cloud gaming could be one of the more fruitful coops.

Microsoft praises facial recognition regulation progress

Brad Smith, the President of Microsoft, has praised steps taken in Washington State to regulate controversial facial recognition technologies, but the landscape still remains incredibly fragmented.

Such issues would rarely bother the consumer today, but the same could have been said about a Facebook personality quiz in 2015. Like the proverbial butterfly flapping its wings, small actions have the potential to blossom into chaos, and the implementation of facial recognition certainly fits into this category.

As it stands, the freedom in which facial recognition technologies are being experimented with, thanks to a lack of accurate regulation, is dangerous.

“Washington state’s new law breaks through what, at times, has been a polarizing debate,” Smith said in a blog post.

“When the new law comes into effect next year, Washingtonians will benefit from safeguards that ensure upfront testing, transparency and accountability for facial recognition, as well as specific measures to uphold fundamental civil liberties.”

Regulation applied retrospectively is a very difficult thing to do. In this case, as some police forces and intelligence services have been making use of the technology, they might resist any attempts to draw limitations. Regulating proactively to prevent abuse instead of trying to take away existing powers is a much more effective approach to take, removing the risk of concessions and compromises.

This is what Washington State has done, as Smith praises. Governor Jay Inslee has attempted to get ahead of the adoption curve before it progresses too aggressively.

Passed on March 12 by a 27 to 21 count, Senate Bill 6280 was signed into law by the Governor on March 31. This piece of legislation creates a framework to dictate how facial recognition technologies can be used by authorities but protects democratic freedoms and civil liberties. This is the accountability that it required for a pervasive technology which poses a significant threat to privacy and a significant opportunity for misuse.

What is worth noting is that while Washington State is claiming the praise here, there are others who have made very ambitious progress in this field already.

Washington State should of course be commended for this piece of legislation, but lawmakers in Illinois deserve the crown when it comes to forward looking law. Senators in the midwestern state have already passed the Biometric Information Privacy Act, which offers stringent protections to citizens by designating biometric data as valuable as a social security number. Companies and authorities would have to consult users and citizens before using the technology, rules which Facebook has fallen foul of as it faces another privacy lawsuit in the state.

Amazingly, the Illinois Biometric Information Privacy Act protecting citizens against the free-wielding and unvalidated implementation of facial recognition technologies was signed into law in 2008.

While Illinois set the standards in years gone, Washington is taking legislation of this technology to a new level. Under the new rules:

  • APIs or other technical capabilities will have to be made available to enable testing of the technologies by third parties to ensure there is no bias embedded in the algorithms
  • Vendors must also disclose any complaints or reports of bias regarding the service
  • A clear use and data management policy must be created and validated before any technologies can be implemented by authorities
  • Humans, not machines, must be responsible for the decision making associated with any component of the facial recognition technology
  • Mass surveillance has been ruled out. Implementation must be for a specific purpose, though there are exceptions to the mass surveillance case, (1) if a warrant allows it (2) finding a missing person or identifying a deceased individual (3) exigent circumstances
  • Surveillance cannot be applied to any individual’s exercise of First Amendment rights, and authorities cannot justify facial recognition based on a person’s ‘religious, political or social views or activities’
  • Finally, any implementations must be opened to public consultation

There are of course many more nuances and clauses written in suitably foreign legalese, though as you can see from the bullet points above, this is a very comprehensive law which should prevent the flamboyant implementation of facial recognition technologies.

Getting regulation in front of the rapidly developing technology industry is a thankless and often impossible task, meaning most legislation should be viewed as risk mitigation. These rules are promising, but there will certainly be loopholes exploited by the slippery lawyers of Silicon Valley. However, Washington State legislators should be applauded for their efforts to control a potentially divisive technology.

Given the complexities of the technology industry, it is slightly unfair to criticise lawmakers for not being able to protect us completely from the nefarious twists and turns of the digital economy. Few people in the world understand how the technology industry works today, and a radically smaller percentage can accurately forecast developments over the next decade. This is what we are asking of legislators.

Washington, Illinois and California are three who have made progress, but it is critical other states follow the lead. For evidence of why, simply have a look at the impact 2015’s ‘This Is Your Digital Life’ Facebook app has had on life years later.

Microsoft places restrictions on Azure as demand increases by 775%

Microsoft has said there has been 775% increase of cloud services in regions that have enforced social distancing, and it has placed restrictions on customers to ensure performance.

The cloud companies, all segments, are set to profit from the coronavirus outbreak thanks to companies being forced to embrace remote working and mobility. With more employees operating outside the office, more workloads will have to be migrated to the cloud to ensure work can be completed. Although this is an attractive dynamic for the cloud companies, there are of course limits.

“We’re implementing a few temporary restrictions designed to balance the best possible experience for all of our customers,” Jared Spataro, Corporate VP for Microsoft 365 wrote in a blog entry.

“We have placed limits on free offers to prioritize capacity for existing customers. We also have limits on certain resources for new subscriptions. These are ‘soft’ quota limits, and customers can raise support requests to increase these limits. If requests cannot be met immediately, we recommend customers use alternative regions (of our 54 live regions) that may have less demand surge. To manage surges in demand, we will expedite the creation of new capacity in the appropriate region.”

Limiting performance is one way to irritate customers but considering the circumstances Microsoft will have little other option. The firm has said it will prioritise the activities of some customers however, those being as you would expect:

  • First responders
  • Emergency routing and reporting applications
  • Medical supply management and delivery systems
  • Emergency alert applications
  • Health-bots, health screening applications, and websites
  • Health management applications and record systems

The biggest surges for the Azure product have been in Western Europe, South East Asia and Brazil, though perhaps it should be scaling operations in the US in preparation for dramatic increase.

Across the US, numerous States have declared a state of major disaster which have been signed by President Donald Trump. In the first instance, this appears to be a bureaucratic procedure which would allow access to federal funding, but it could also be the first step towards more stringent self-isolation measures. This is not commonplace across the US for the moment, but with COVID-19 spreading rapidly across the country, it most likely will be in a short period of time.

Worldwide, Microsoft is attempting to scale-up activities to meet the demand, and while it might have to irritate some customers with restrictions in the immediate future, there will be rewards in the future. Some companies will return to normal-service post-coronavirus, though these digital transformation projects to enable remote working and mobility might well bed in for the majority.

Almost every company has been talking up its own digital transformation project for years, and while events today might have accelerated adoption of the laggards, the cloud companies will certainly benefit in a sustained manner for the long-term.

Microsoft buys into NFV with Affirmed Networks acquisition

US software giant Microsoft has made one its most aggressive moves into the telecoms sector with the acquisition of virtualization specialist Affirmed Networks.

Affirmed is all about virtualized mobile network solutions and Microsoft seems to have decided it’s time it got more involved in that sort of things too. It’s already a datacentre and cloud giant, of course, so as telecoms increasingly moves in that direction it make perfect strategic sense for Microsoft to do so too.

“At Microsoft, we intend to empower the telecommunications industry as it continues its move to 5G and support both network equipment manufacturers and operators in their efforts to find solutions that are faster, easier and cost effective,” blogged Yousef Khalidi Corporate Vice President of Azure Networking at Microsoft.

“Today, I am pleased to announce that we have signed a definitive agreement to acquire Affirmed Networks. Affirmed Networks’ fully virtualized, cloud-native mobile network solutions enable operators to simplify network operations, reduce costs and rapidly create and launch new revenue-generating services.

“This acquisition will allow us to evolve our work with the telecommunications industry, building on our secure and trusted cloud platform for operators. With Affirmed Networks, we will be able to offer new and innovative solutions tailored to the unique needs of operators, including managing their network workloads in the cloud.”

We don’t know what Microsoft paid because Affirmed is private, but it will be in the hundreds of millions. If traditional telecoms vendors aren’t alarmed by this acquisition then they should be. It seems like a classic example of the IT sector taking advantage of the new opportunities presented by NFV and virtualization in general and if Microsoft starts sniffing around things like OpenRAN then outright panic would seem appropriate.

Who is set to benefit from the COVID-19 outbreak?

For millions of individuals and businesses, the threat of COVID-19 is financial ruin, but there are parts of the technology industry that are benefiting from the considerable changes forced on society.

The FTSE 100 Index is likely to close below 5,000 today, a 27% decline in a month, while the Dow Jones is currently down (at the time of writing) 31% over the same period. Economies around the world are being hit disastrously hard, but some will see gains out of this pandemic at least temporarily, if not permanently.

Cloud Computing

The cloud computing segment has been on the rise for years, though as more employees find themselves restricted to their homes more workloads will have to be migrated to the cloud to ensure the business can function as usual.

For the cloud companies, the coronavirus outbreak is effectively forcing some organisations through a very rapid digital transformation project, to embrace the cloud and mobility trends. From an IaaS perspective it means more money, from SaaS it means more engagement and PaaS more opportunity.

Amazon Web Services, Microsoft Azure and Google Cloud are the obvious beneficiaries as market leaders, though for companies like Oracle, who might be working with more traditional industries that have resisted evolution to date, new conversations about enabling the workforce will have to occur.

Interestingly enough, once these businesses have begun their journey towards a cloud-based business model and environment, it is highly unlikely they will go into reverse. This could be a catalyst for accelerating the already fast-blossoming cloud segments.

Video conferencing and collaboration

Although there is no substitute for a face-to-face meeting to progress and complete complicated projects, alternatives have to be sought today. Many businesses are encouraging more meetings to be conducted via video links rather than email to not only ensure effective communication but ensure well-being of employees. Contact with colleagues via video link is not perfect by any stretch, but it might assist some who are feeling the loneliness of remote working.

Microsoft is an obvious beneficiary here, it announced last week the number of daily active users for its Teams collaboration suite increased by 12 million, though there are many others who are financially better off also.

Zoom Video Communications, a remote conferencing services company headquartered in San Jose, has seen share price increase 130% since the beginning of the year, while more marketers are turning to companies like ON24 to purchase webcasting and webinar services to ensure lead generation projects can continue.

As mentioned above, some companies are being forced into a digital transformation project meaning some of the remote working capabilities might be retained in the long-term, but virtual alternatives are never going to be a complete replacement for face-to-face meetings, where we can subconsciously pick up non-verbal communication cues so easily.

Electronic payments

The likes of Visa, Mastercard and AMEX are already benefitting from long-standing trends where physical cash is quickly becoming a thing of the past, though the COVID-19 outbreak could accelerate this.

In the short-term, some shops are now only accepting digital payments, though as the total number of transactions are decreasing, so will revenues. That said, in the long-term it could force customers into adopting digital payments.

Although cash is quickly becoming a thing of the past, some from the traditional generations still resist the use of digital currency. The chequebook took years to fall out of common usage as banks and shops were still compelled to accept such payment when offered. The same could be said of physical cash; as long as some still want to use it, it will persist. But in refusing to accept physical payments, shops are forcing some individuals to adopt digital payments.

This is not a likely to be a permanent change for all, but it might be for some, both in terms of consumers who adopt digital payments and the shops who will now only accept digital currency.

Ecommerce

The more people are at home bored, the more likely fingers are going to venture towards the eCommerce apps to spend the money which has been saved from not going to the pub. Your correspondent’s household has turned into a satellite Amazon storeroom thanks to certain individuals in the flat.

Streaming, gaming and video content platforms

This is perhaps the most obvious example of a beneficial segment.

In terms of video streaming, parents will need to occupy children, while adults will also need entertaining as pubs, clubs, theatres, parks, beaches, holidays and gigs all disappear. Netflix is already immensely popular, but with more people stuck at home in the evenings, it may well become more so, but this benefit is not limited to the content king. All streaming platforms could benefit, while Disney+ is launching at a good time to capture the attention of European consumers.

In terms of video platforms outside of streaming, YouTube is enjoying particular success. Not only are there those who are trying to entertain themselves, but there is also millions of hours of information (some much more accurate than others) on the pandemic itself.

From a gaming perspective, this is back to the boredom conundrum. With the usual entertainment venues shut down, consumers will need to be entertained. The likes of Microsoft Xbox, Google Stadia and PlayStation are likely securing additional subscriptions as well as in-game purchases.

Savvy corporates

For those corporations who in a more fortunate cash position than others, the shock to the financial markets could be viewed as an opportunity. Softbank is a perfect example.

Today (March 23), Softbank announced it was selling off certain unnamed assets to fund a second share buyback programme. Combined with the first announced on March 13, Softbank will be able to retire 45% of Softbank shares which are currently on the open market.

Generally speaking, the fewer shares which are on the open market, the less exposed a company is to external influences. All you have to do is look at the conflict between Elliott Management and Twitter/AT&T/Telecom Italia to see what influence an activist investor can have on a business where share price has taken a decline. Share buyback programmes could be viewed as a way to protect a corporate strategy from short-term influences and aggressive investors.

Online grocery delivery

With the rush on supermarkets persisting as the days turn into weeks, online grocery delivery companies are seeing a surge in popularity.

Online shopping delivery service Ocado suspended its website last week, telling customers demand exceeded its capacity to deliver. The firm has said it would fulfil its orders and will soon reopen, with rations placed on certain food items. Share price for Ocado has surged this month, though it did decline once it announced it would temporarily stop taking orders.

The telecommunications industry

The telecommunications industry is critical to today’s society functioning seamlessly, though it has traditionally been ignored. Consumers have simply expected the internet to work without appreciating the importance of the telecommunications industry. Telcos are viewed as boring companies, paid little attention in everyday life.

Thanks to the number of people attempting to entertain themselves, work from home or access educational resources the telco industry has been thrust into the limelight. Authorities are putting in measures to protect these valuable assets, not only to ensure consumers are able to continue their daily lives but so emergency services can continue to function, or research labs can collaborate to create a vaccine.

The telco industry underpins the success of almost every element and facet of society, and now the networks are under pressure, everyone realises it.