Summary: Microsoft is acquiring 5G network specialist Affirmed Networks only a few weeks after Google laid out its plans for the edge.
Deal details: Affirmed Networks supplies network operators with management tools using network function virtualisation or NFV. Its Unity Cloud manages 5G network capacity through tools such as network slicing. No deal terms were mentioned but Affirmed completed a $38m funding round in March 2019 and had raised about $155m in total. Unconfirmed reports have put the price tag at slightly over $1b. Affirmed is a reasonably large sized company with over 500 employees and over a hundred deployments including Orange and AT&T.
Angle: With this deal Microsoft is starting to set out its 5G strategy. The approach it is taking is through network function virtualisation. NFV is a sort of next generation-SDN. For 5G operators, what that means is network functions such as traffic management, provisioning and monitoring can be de-coupled from expensive proprietary hardware and run in virtual environments on commodity servers.
Rationale and outlook: Once Azure and Affirmed are merged, 5G operators, at least in theory, will be able to manage their networks from Microsoft’s cloud without needing hardware suppliers such as Ericsson or Huawei. That is quite a thought. But it is more than that, as all the advantages of virtual servers such as speed of deployment, rapid scaling up and down, and simplified disaster recovery and roll back come into play. Given all that, it is not surprising there has been a lot of attention around NFV. Software is truly ‘eating hardware’, and it seems Microsoft sees it as the path to playing a major role in the roll-out of 5G. Microsoft could also view the network as the bridge between core cloud compute and edge compute. By providing mobile operators with the management tools, it can more easily integrate and talk to Azure-based infrastructure wherever it resides.
Clouds approaching from different angles: This network management-centric approach is quite different to those recently outlined by AWS or Google. While Google is looking to its container orchestrator Kubenetes as a way of extending its cloud to the edge, AWS, which has moved further than anyone else down this road, has decided that ‘networked data centre in a box’ is the strategy. Meanwhile, VMware is building out a Kubernetes-based platform, looking to extend its dominance in private cloud to the edge. The edge is emerging as one of technology’s key battlegrounds in 2020 and it is hard at this stage to see which strategy will pay off.
One note of caution: We should perhaps not read too much into the thinking behind this acquisition. For the last few years Microsoft has been building capability]ies in the cloud area, but piecemeal and slightly randomly. Slightly puzzling acquisitions like the code repository GitHub for $7.5bn in 2018 sit alongside tiny acqui-hire type deals such as cloud storage start up Mover. Motivation for these deals, especially GitHub, are not always clear. Of course, Microsoft has so much cash it is almost a problem. It held over $130b in 2019 and much of it is outside the USA. Repatriating it could create major tax problems for Redmond. Whatever the thinking, the acquisition of Affirmed could be the start of some interesting moves in the 5G space as clouds position to extend from core to edge.
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