Microsoft acquires Affirmed Networks, which provides fully virtualized, cloud-native networking tech to telecom operators, with a focus on 5G and edge computing
Frederic Lardinois / TechCrunch :
Context & Ripple Effects
Microsoft is buying its way into the telecom core: Affirmed Networks sells fully virtualized, cloud-native networking software aimed at 5G and edge computing, and Bloomberg sources pegged the deal at roughly $1.35B. It is the same playbook Microsoft used when it picked up FSLogix for virtualization in 2018 and Revolution Analytics for analytics back in 2015 — acquire the capability rather than build it.
The move set up a rapid follow-on: two months later Microsoft announced it would also buy Metaswitch Networks, whose virtualized network software customers include BT and Sprint, and by mid-2021 AT&T agreed to run core parts of its 5G network on Azure. Affirmed is the entry ticket that turned Microsoft from a cloud vendor adjacent to telecoms into one competing to host carrier network functions themselves.
First-order effects
- Telecom operators building 5G networks gain a hyperscaler-backed option for a cloud-native core, with Affirmed's virtualized technology now folded into Microsoft's stack rather than sold by an independent vendor.
- Affirmed's existing carrier customers face a transition from startup vendor to Microsoft product line, changing support, roadmap, and pricing dynamics overnight.
Second-order effects
- AWS and Google, which court the same carriers for 5G and edge workloads, are pushed to respond with their own telecom-focused offerings or partnerships as Microsoft pairs Azure with acquired network software.
- Rival network equipment and software vendors like Metaswitch — itself acquired weeks later — become acquisition targets, accelerating consolidation among virtualized-networking specialists.
Third-order effects
- If the pattern holds, carrier networks virtualize onto hyperscaler clouds, shifting telecom infrastructure economics from hardware vendors to a few cloud platforms — and concentrating the 5G core in the hands of Microsoft, AWS, and Google.
- Regulators and carriers will have to weigh the dependence that creates: national 5G infrastructure increasingly running on a small set of foreign-owned cloud platforms.
The trend: Hyperscalers are acquiring virtualized-networking specialists to move from hosting telecom workloads to running the 5G core itself.