Microsoft’s newest edge tool is Affirmed Networks

Microsoft’s newest edge tool is Affirmed Networks

Microsoft Corp. has paid an undisclosed sum for 5G mobile software maker Affirmed Networks Inc. in a deal that is intended to boost Microsoft’s strength in providing a continuum of cloud to edge computing services.

Ten-year-old Affirmed, which announced a new CEO with news of the buyout, creates virtual networks for communication services providers using or moving to 5G systems. Quoting unnamed sources familiar with the buyout, Bloomberg said the company was valued at $1.35 billion at the deal’s closing.

Like many large technology companies globally, Microsoft has closely watched communication service firms rush to reduce their operational costs and complexity and to increase the speed at which they can update their service portfolios.

The preferred way to pull off that business model change is for communications vendors to ditch their proprietary hardware in favor of virtualized, cloud-native network services that they buy as needed. Microsoft has its Azure cloud computing service.

Microsoft published an explainer on its blog saying that the purchase will “allow us to evolve our work with the telecommunications industry.” AT&T is an established partner with Microsoft in 5G revenue-building.

Anand Krishnamurthy announced the deal – and his selection as Affirmed Networks’ president and CEO – on his company’s site.

The company had raised $155 million through its purchase last week, according to data services provider CrunchBase. Bloomberg quoted a Pitchbook Data total of $240 million in funding, with the difference in figures likely being attributable to a round of funding raised in February 2020 that was not announced publicly. Private companies often quietly seek out acquisitions while pursuing funding and IPOs – the vetting process offers companies a way to establish their market valuation independent of an acquirer’s offer.

Analysis

In tactical, immediate terms, Affirmed Networks was a natural acquisition target, with its fully virtualized, cloud-native mobile network software. Affirmed Networks in October, demonstrated its UnityCloud 5G Core software on Amazon Web Services. Amazon is a direct competitor of Microsoft in cloud services. The deal gives Microsoft an inside track on migrating workloads to its cloud while still offering customers the ability to use AWS – addressing enterprise customers’ concern about vendor lock-in will be important.

There is another angle on Microsoft’s move, though. Technology firms are also vying with telecommunications firms to dominate edge computing. Each industry has a unique skill set in terms of building out edge computing systems. Indeed, it is possible to imagine a near future in which a household name in computing buys a storied telecommunications firm or vice versa.

Longer-term, Microsoft, having a toe hold in just about every market niche for computing, could be just as covetous of wireless 5G and edge revenue anticipated from connected vehicles and wireless artificial- and augmented reality.

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