What classes could be discovered from Microsoft’s cloud transformation?
Editor’s be aware: That is the primary a part of a three-part sequence co-authored by Jim Brisimitzis and Chetan Sharma, exploring the nexus of the cloud/AI and telecom industries from an business lens. Their many years of expertise within the business and in innovation give us a singular perspective on the teachings we’ve discovered and the way they are often transferable.
The story of Microsoft’s transformation is a robust lesson for all industries, and for Telcos specifically. Within the mid-2000s, Microsoft was a behemoth of on-premises software program with billions of {dollars} in income tied to three-year enterprise agreements. The concept that they might pivot to a consumption-based cloud mannequin was unthinkable to many. However Microsoft regarded forward and noticed a brand new period coming. In 2008, with a market capitalization of simply $126.9 billion, they introduced their intention to construct Azure.
This was a large, speculative guess. The engineering hurdles have been immense, requiring them to show billions of strains of enterprise code into elastic, multi-tenant providers and construct information facilities able to absorbing unpredictable workloads whereas guaranteeing reliability. Traders have since rewarded this daring imaginative and prescient. At present, Microsoft’s market capitalization is sort of $4 trillion, an almost thirty-fold improve fueled largely by Azure and now AI. They didn’t defend their legacy; they embraced a future that, on the time, was something however a certain guess.
Over time, Microsoft and different hyperscalers constructed deep stacks that stitched collectively silicon, servers, networking, orchestration, and developer instruments into unified, resilient platforms. Now, with the rise of AI, they’re reinventing themselves but once more. As Scott Guthrie lately famous when unveiling Microsoft’s Fairwater AI datacenter: “To satisfy the essential wants of the most important AI challenges, we would have liked to revamp each layer of our cloud infrastructure stack… the place software program and {hardware} are optimized as one purpose-built system.”
The lesson for Telcos is obvious: whereas they’ve lengthy been identified for delivering dependable connectivity, right now’s market more and more values the software-driven agility, scalable infrastructure, and speedy innovation that hyperscalers have perfected. Microsoft acknowledged early on that for the sake of their long-term success, they wanted to manage the platform, not simply the elements they purchased from distributors. That is true for all hyperscalers and huge SaaS suppliers — a time-tested playbook with extremely rewarding outcomes. By studying from this playbook, Telcos can reposition themselves for sustained development, improved effectivity, and renewed competitiveness.
Telcos have traditionally trusted vertically built-in options, the place {hardware} and software program come as a tightly coupled bundle from a handful of distributors. This has created a excessive bar for community availability, nevertheless it has additionally restricted flexibility and innovation. Distinction this with the strategy of hyperscalers, which meet their distributors with particular necessities and a imaginative and prescient for a requirements-driven platform.
Software program is the nice neutralizer, redefining the principles of each business. Hyperscalers used software program to summary away {hardware}, construct platforms at unprecedented scale, after which leverage these platforms to disrupt industries from retail to finance. Crucially, in addition they used it to disrupt themselves, consistently reinventing their very own services earlier than opponents might. At present, AI represents the subsequent evolution of this playbook. Hyperscalers are re-architecting their stacks for AI at huge scale — from silicon and servers to information materials and software fashions.
In a joint GitHub + Accenture research, builders utilizing Copilot accepted ~30% of its strategies, with 90% reporting they dedicated code advised by Copilot. The message is straightforward: staying nonetheless is a certain guess for irrelevance.
Microsoft’s strategy to Azure follows related “reinventions” of different world expertise gamers together with Oracle, SAP, Cisco, and VMware, all of whom have needed to pivot their portfolios from on-premise license-driven fashions towards cloud, SaaS, and consumption-based scalable providers.
There are numerous classes to attract on, however now we have distilled 4 which are essential for Telcos to contemplate. Every of those classes is central to the hyperscaler playbook and may allow Telcos to rework their enterprise fashions.
- Rethink Vendor Relationships: Embrace Disaggregated, Software program-First Architectures: Microsoft’s pivot to Azure demonstrated the facility of a disaggregated structure. By decoupling {hardware} from software program, Telcos can unlock modularity, expanded vendor selection, and accelerated characteristic supply. They’ll observe go well with by embracing open-source cloud-native community capabilities, deploying white-box {hardware}, and intentionally lowering proprietary dependencies. This might not solely decrease improve prices but additionally allow quicker, extra agile modernization throughout their networks. This is step one for Telcos to turn into “TechCos,” the place their community actually turns into a value-generating platform for others to leverage and construct on.
- Embrace True Multi-Tenant, Self-Service Platforms: What units hyperscale clouds aside is their capacity to serve 1000’s of tenants securely and independently on shared infrastructure. With robust isolation and simple, self-service provisioning, they’ve created ecosystems the place companions, builders, and prospects can all innovate in parallel. Telcos can replicate this playbook by re-architecting networks and edge assets as cloud-native, API-driven platforms. This implies providing fine-grained tenancy isolation and constructing self-service portals for inner groups and unbiased software program distributors. The payoff is a basic repositioning: from commodity connectivity suppliers to true platforms that catalyze ecosystem innovation.
- Undertake Consumption-Based mostly Billing and Show It with Monetary Contrasts: Cloud gamers didn’t simply redefine expertise; they rewrote the economics of IT. Their shift to consumption-based pricing aligned prices with precise utilization, inspired experimentation, and fueled ecosystem development. Telcos could make the identical pivot. By providing pay-as-you-go fashions for edge AI inferencing and APIs, they’ll create a platform the place builders and companions actively construct. Performed proper, consumption-based billing can reposition telcos within the eyes of traders, reworking them from debt-laden infrastructure gamers to scalable, software-driven platforms with stronger development potential.
- Instrument Programmable Platform for Enterprise Alternatives: 5G was presupposed to be the enterprise cycle; nevertheless, most operators have hardly gone past simply providing 5G strains to the enterprises as their “core” enterprise technique. To have the ability to construct and develop a sustainable enterprise enterprise, one has to give attention to how vertical industries work and need the telecom world to have interaction with them. Service suppliers who construct the underlying platform of connectivity and compute that’s accessible and programmable to the wants of 1000’s of enterprise roadmaps.
In lower than 20 years, Microsoft’s market cap has elevated almost thirty-fold, fueled by Azure and AI. Telcos stand at an identical essential juncture. The teachings from hyperscale clouds are clear: rethink vendor relationships, re-architect as multi-tenant platforms, and embrace consumption-based enterprise fashions. These shifts received’t simply modernize infrastructure; they are going to redefine telcos’ function within the digital financial system, transferring them from commodity connectivity suppliers to agile, software-centric platforms.
In our subsequent piece, we’ll increase on this concept of “platformization,” exploring why Telcos should rethink their id and increase their horizons, how they’ll leverage non-public 5G and information sovereignty as entry factors, and what it means to turn into a real platform supplier quite than a capital-intensive utility. If one doesn’t prepared their platform technique within the 5G cycle, fine-tune it, and begin producing new income, it actually received’t occur within the 6G decade.
Lastly, within the third and ultimate piece, we’ll flip to the AI inflection level: inspecting how AI isn’t only a price saver however a possible development engine, and why Telcos — uniquely positioned on the edge of information — have a chance to turn into central gamers within the enterprise AI financial system. We are going to show it with examples of stay use instances.
Collectively, this sequence will define not simply classes discovered however a playbook for a way Telcos can reinvent themselves for the subsequent decade of disruption. Our aim is to encourage a worldwide dialog with intentional provocation, as a result of within the digital age we stay in, change is inevitable, and software program would be the enabler. We encourage everybody studying this sequence to share your ideas and problem our pondering.
