Microsoft keeps mum on plans for Metaswitch rump and AffirmedMicrosoft keeps mum on plans for Metaswitch rump and Affirmed

AWS, Google and Microsoft famously provide the infrastructure that hosts much of the world's IT. They have also been trying – without much obvious success – to promote themselves as public-cloud landlords for the tenants of 5G core and other network-specific workloads. Only Microsoft, however, has really ventured into the actual network applications, snapping up Metaswitch and Affirmed Networks in deals that reportedly cost it about $1.62 billion five years ago. Its sale of Metaswitch to Alianza last month, likely for a knockdown fee, seemed to mark an ignominious retreat to infrastructure.

Ignominious is obviously not how the software giant frames it, but the main message from insiders is that Microsoft's telecom focus will henceforth be on the infrastructure side, leaving most of the applications development to others. Even before news broke in June last year that Microsoft was slashing telecom jobs, with plans to quit both Metaswitch and Affirmed, Rick Lievano, the chief technology officer of its telecom business, was downplaying talk of Microsoft as a network applications rival to Ericsson and Nokia. The big reason for buying Metaswitch and Affirmed in 2020, he told Light Reading two years ago, was to gain necessary telecom expertise.

Yet Microsoft still has an oversized foot in the applications camp, and to remove it without a stumble would be awkward. A source within the company has confirmed the sale of Metaswitch to Alianza did not include Metaswitch's packet core assets, which remain lodged within Microsoft. The company line is that Microsoft will continue to support its existing packet core customers. Does this mean the packet core rump of Metaswitch and the much bigger Affirmed Networks business are not up for sale?

That much is unclear, but any sale would probably have implications for the telecom operators using these products. The natural consequence would be an involuntary change in the identity of the packet core supplier. If Microsoft continued to provide the infrastructure for this packet core, it would maintain its relationship with the telco. But the telco would overnight find itself with two suppliers where previously there had been one.

Not many clients

Microsoft's failure to make a lot of progress in this market means the visible impact of any ownership change would be on just two big operators. In the US, there is AT&T, which announced its plans to run a 5G packet core on Microsoft infrastructure back in June 2021. The decision was accompanied by a major transfer of staff and core network assets from AT&T to Microsoft as the software company seemingly took over the full operation of AT&T's 5G control center. Before all this happened, AT&T had been identified as a big customer of the packet core and orchestration products developed by Affirmed.

The other Tier 1 Microsoft customer, unveiled around this time last year, is Etisalat of the United Arab Emirates. Much like AT&T, Etisalat is using Azure Operator Nexus, the brand name for the cloud infrastructure set of products that Microsoft offers telcos. Besides the actual infrastructure and other gubbins, this includes the packet core application based largely, if not solely, on Affirmed's technology. Before the deal with Microsoft was announced, Etisalat was already using a 5G packet core supplied by Affirmed, according to a reliable source.

A sale of Affirmed and the Metaswitch packet core assets would conceivably aid Microsoft's partnerships with Ericsson and Nokia. Whatever Lievano says about gaining expertise, Microsoft's packet core role – however small – still makes it look like a potential applications rival to the Nordic vendors. Many will suspect its priority is selling a package of its own applications and infrastructure rather than accommodating others on Nexus. And there appears to be no public example of a telco that uses an Ericsson or Nokia packet core in tandem with Nexus for a commercial service.

What's more, $1.62 billion is a lot to have spent on expertise and winning a couple of Tier 1 contracts. The terms of the deal with Alianza were not disclosed, implying the Metaswitch-minus-packet-core assets did not go for much. In any case, most of Microsoft's telecom spending in 2020 reportedly went on Affirmed Networks, which sold for $1.35 billion, according to news coverage at the time. That's a significant outlay if the sole intention is to support existing packet core customers and not try to land new deals.

A parallel development is happening in the telco vendor camp, where Nokia has retreated from the risky terrain of infrastructure to the familiar world of applications. Giving up on Nokia container services (NCS) and Nokia Cloudband infrastructure software (CBIS), its two cloud infrastructure products, the Finnish company named IBM-owned Red Hat in 2023 as its primary infrastructure partner. But it aims to be as cloud agnostic as possible.

The concern for existing customers of either NCS or CBIS is what becomes the replacement and how disruptive the shift will be. Nokia, however, has indicated it will provide maintenance and support for its platforms until 2030, which gives customers until 2027 to formulate a plan for migrating to an alternative. As far as Microsoft's telecom strategy goes, some big questions have yet to be answered.