Vodafone ties up Azure deal for IoT, Gen AI and Cloud

Spins off IoT Connectivity into standalone business, will close datacentres across Europe.

A significant cloud and AI announcement between Vodafone and Microsoft Azure will not have an impact on the operator’s cloud networks software, nor will it impact on Vodafone’s partnerships with Google Cloud or AWS, Vodafone has told TMN.

A Vodafone spokesperson confirmed that network functions will stay on-prem and will not be moved to the cloud. They added that the Microsoft deal would see no overlap with Vodafone’s Google Cloud Platform partnership, which is focussed on analytics, nor with AWS on digital/cloud-native apps.

Instead, the spokesperson said, “This is about moving tens of thousands of X86 servers to Azure.”

IoT and hyperscaling the platform

The operator and Microsoft said today that they will be collaborating across a ten year strategic partnership.

It will also move Vodafone’s managed IoT connectivity platform to Azure’s platform. Mircosoft will invest in the platform which will become a separate standalone business by 2024.

Scott Petty, Vodafone CTIO, said in October 2023 at TM Forum’s Digital Transformation World that Vodafone’s IoT Connectivity business is an example of how telcos can build platform businesses.

The company has 170 million IoT SIMs connected to its platform, making a billion Euros of revenue, he said.

“Our IoT platform is an aggregation layer. It hides the complexity of the underlying networks for people who want to embed IoT into their applications and have them work no matter where they turn up in the world.”

Enabling that abstraction layer meant building a network platform in the cloud, Petty said.

“Why do you need that? Because you have a whole bunch of developers that are writing code, doing CI/CD pipelines producing infrastructure, and they’re putting it somewhere. It might be in our private cloud on VMware. It might be on AWS, it might be in GCP. It might be in Azure, and I want to use all four of those. But I want it to be consistent. I want it to be automated. I want all of my observability tools to be built into that. I want to make sure that anyone writing a single piece of code no matter where it is in the technology stack is leveraging that capability. And I can use that to expose services to the external world. Once I have those platforms in place, I can start to build tenants.

“It’s a platform that you can start to expose all of those capabilities in APIs that you can leverage in a consistent way because you built a single cloud platform that sets the consistency of how you deploy an app. That is going to be critical to decide whether you’re able to launch services across multiple markets or make multiple capabilities to enable the services that we talked about.”

Vodafone added today that it also plans to become part of the Azure ecosystem  – making the IoT platform available to “a vast developer and third-party community using open APIs”.

So, while Petty was talking at DTW in wider terms about enabling an abstraction layer to expose its network capabilities as a platform, when it comes to its IoT business, that will now go forward in partnership with Azure, and as a standallone business.

Customer experience

As for Vodafone’s partnership with Google Cloud, although Vodafone said today that it would not overlap with Azure, Vodafone is already using its GCP partnership to improve network performance, and therefore by extension ustomer service.

Petty described how it took it OSS and network probes and integrated them into a data ocean in Google Cloud. Vodafone reduced 120 tools with a set of AI and ML tools sitting on top of the data, building its own presentation layers.

“Once you’ve got that aggregated layer you can start to manage your network much more efficiently as you can create the observability that you need for the upstream applications to leverage that.

“We’ve been able to improve customer service and reduce churn, which is just starting to fund what we really want to do which is build new sources of revenue.”

One of Vodafone’s stated goals for the partnership announced today is to use Microsoft Azure’s Open AI Gen AI across Vodafone’s business to improve customer experience in areas such as its automated digital assistant. This, Vodafone said, might boost productivity and transform working practices.

With OSS and network data analytics benefitting from GCP’s capabilities, and now customer-facing engagements being enabled by Open AI’s Gen AI capabilities, along with edge and other compute capabilities with AWS, Vodafone certainly has that multi-cloud capability that Petty mentioned. Strategically it will be interesting to see how that strategy continues to play out, so that Vodafone can meet Petty’s goal of building a consistent abstraction platform that can expose capabilities to its own applications and customers. It could also create some useful competitive tensions that Vodafone can take advantage of.

More partnership goals

A press release stated further goals for the partnership; a third aim is to create new digital and financial services for SMEs in Europe and Africa, whilst a fourth target is to scale M-Pesa across more countries in Africa.

Finally, the companies want to overhal Vodafone’s data centre strategy. Vodafone will replace multiple physical data centers with virtual ones across Europe, which it says will simplify and reduce the operational costs of its IT estate, as well as reducing energy requirements and helping deliver against its sustainable business strategy. These are the “tens of thousands of X86 servers” that are due to be replaced.