A new deal was just signed by Microsoft Corp and AT&T involving a partnership in the development of AT&T's coming 5G network and the use of Microsoft's Azure cloud services.
The companies announced on Wednesday that they reached a multi-year deal, which is apparently worth more than $2 billion.
The deal itself will involve AT&T's use of Microsoft's cloud services for all its computing needs. This will include the use of Microsoft's 365 software suite, namely its Office productivity software for AT&T's 268,000 employees.
The agreement also extends to a partnership between both companies to develop so-called edge computing. This will involve Microsoft's deployment of its resources alongside AT&T planned 5G network rollout. Microsoft will provide AT&T with the means to pass data back and forth with as little delay as possible.
This will include network technologies that will work with connected software such as air traffic control systems used in drones.
Under the agreement, Microsoft will essentially become AT&T preferred cloud vendor, which is a big win for Microsoft and a big blow to its competitor Amazon. Microsoft has long been trying to get a bigger share from its much larger competitor.
Jeff Bezos' Amazon Web Service is currently the world's bigger public cloud service provider, servicing millions of customers who run their software applications on its data centers.
The announcement of the deal comes a day after AT&T announced that it intends to partner with International Business Machines Corp (IBM) to help it modernize its software by utilizing cloud-based services.
The exact figure of the proposed deal was not immediately revealed. However, an IBM spokesman did mention that the multi-year deal will be worth billions of dollars.
According to AT&T chief executive for communications, John Donovan, the company's partnership with Microsoft is in line with its goal of becoming a "public cloud-first" company.
The aim is to predominantly rely on data centers from third-party providers to power its businesses. Donovan was further detailed that the move to cloud computing is the most far-reaching initiative the company has ever undertaken, mainly due to its scope.
Meanwhile, Microsoft will stand to benefit in having AT&T as its partner as it will likely serve as a marketing tool for it to sell its edge computing services.
Microsoft's CEO Sayta Nadella mentioned in an interview that the partnership is a unique match given AT&T's network capabilities and Microsoft's reputation as a leading developer tools company. Analysts speculate that the partnership could result in huge opportunities for both companies, given their respective expertise.
