Summary: Telefonica is targeting the enterprise 5G market with a combination of Microsoft’s on-premise version of Azure cloud, Private Edge Zones, and its own enterprise network capabilities. The Spanish carrier is tying up with Microsoft to enable its many manufacturing customers to automate their industrial processes with on-premise compute and software-defined networking. This a win for Microsoft, but inevitably it raises question marks about Telefonica’s long standing strategic partnership with Google.
Details: Factories and manufacturing plants are widely cited as early adopters of 5G and edge compute, and Microsoft brought out Private Edge Zones specifically to target this vertical. Private Edge Zones are essentially on-premise, small footprint versions of Azure, based on a Microsoft-branded hardware device, Azure Stack Edge (Microsoft’s competitor to Amazon Snowball). What is critical here is the the connectivity piece and that is where Telefonica comes in. Microsoft has tightly integrated the product with SD-WAN, greatly simplifying the deployment of applications across multiple hybrid environments. On assembly lines in factories, for example, where you might find, say, a private Azure Stack Edge box attached to an industrial camera, checking beer bottles for contamination (as a random example).
Angle: It might seem a bit strange that Telefonica is going to market with Microsoft’s edge compute, when it already has a deep relationship in place with Google Cloud. Google hosts a Spanish region from a Telefonica data centre, and even publicly announced a commitment to develop a portfolio of solutions for 5G using Google Cloud’s Mobile Edge Computing platform last year. But the approaches are different: Google’s lead product in this area is a software product, Anthos for Telecom, whereas Microsoft’s Private Edge Zones are built around what it calls hardware-as-a-service. This in itself is an interesting development for Microsoft as traditionally it has taken the partnership route, but the type of customer who will be interested in a managed offering and the type of customer that wants to deploy by itself could not be more different. It is also worth bearing in mind that almost all of Telefonica’s customers that own or operate manufacturing plants will have long-term relationships with Microsoft. That will enable Microsoft to put together packages with some enticing incentives to purchase, such as retiring or settling old licence claims.
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