Wade4Wireless

Is Microsoft bailing on Private Networks?


Yes, Microsoft downsized Azure and Telecom groups in June, 2024. It appears they’re throwing in the towel. This bums me out because I was a fan of Azure for the 5G core. Unfortunately, it may have been too far ahead of its time. At least, that is the way I see it. 

On the other hand, they may know something we don’t and make the decision to bail on a failing market. They’re not stupid, well, at least most of the time they’re not stupid.  

From what I hear:

The downsizing of Azure and Telecom groups is significant, it seems to be premature to figure out if Microsoft is abandoning private networks. It’s not the first time they made pivots.

Now what?

So, in telecom, the way I see it, this is basically Microsoft bailing on private 5G, P5G, and thinking Enterprise has no taste for it. 

Sure, they will support their DoD contract, probably because of contractual issues, but as for the rest, maybe they gave up. The market will take a long time to mature, they may not have the patience to lose money for so long. Unless they see no profitable future in private 5G.

Why?

I guess they bought into the hype like the rest of us. They thought the market was just taking off. Their input (I’m assuming) came from the telecom OEMs. Did they give bad guidance? It appears they did and Microsoft figured it out.

I also think they don’t have the patience to see the market mature in enterprise. I’m assuming when they read the tea leaves, they don’t see a profitable future. 

Maybe they’re right! Or maybe they don’t want to deal with all the competition with a lower bar for entry. I am not sure. Remember Microsoft appeals to everyone for software, but telecom services are everywhere. Private telecom network support can come from almost anywhere, including Amazon. Maybe they’re assuming the do-it-yourself people will start building their own models. 

Think about their competition. Verizon, AT&T, T-Mobile, Nokia, Ericsson, AWS, Kajeet, and probably a slew of people I didn’t mention. 

So, they ate the investment, laid people off, and abandoned it for enterprise, outside of the DoD of course.

What does this mean to the industry?

  • It sucks! If they bail, who’s next?
  • It means only telco experience matters and not just anyone can jump in.
  • Maybe it means you have to have an end-to-end solution to compete.
  • Maybe it’s a low margin business that relies heavily on services and not software.

Giving up on low margin business.

I really think Microsoft got into this thinking they could offer a unique position that they could integrate into their Office line of products and it just didn’t pan out. 

Let’s face it, they have a borderline monopoly on business software. I mean who hasn’t used Excel, Word, or even PowerPoint? What about SharePoint? What about TEAMs?

While most of us think it’s cheap, these are high margin and mass distributed SaaS services. They get a subscription service that has paid off handsomely for Microsoft. It is the low hanging fruit that nearly every business over 10 people will pay for eventually just to fit in and communicate with others.

While I admire Google’s attempt to move into Enterprise, it has been an uphill battle for them just so they can give Microsoft minimal competition.

Microsoft is in this to make money, and if they can’t see a way to increase margins or scale, it’s time to bail. Maybe when someone has a winning model they will buy their way back into this market.

What’s next for P5G?

I think it’s business as usual. For some reason Azure just faded into the background while other players started to emerge. We see players that are use case focused, not generic network focused. I believe that they get it. I also see the teams that don’t pigeon hole themselves into P5G and looking at all solutions that would include but are not limited to Wi-Fi, LoRa, PLTE, and more. 

I would blame Microsoft’s sales and marketing for letting that happen, not all the people they let go. I feel bad for all of them just the same. 

For all of you former Microsoft workers that could not land another gig inside, look on the bright side, you got to work for Microsoft which looks great on the resume. I went through this exact scenario when I was with Qualcomm and they shut down their FLO TV division. What can you do? Get another job.

To be fair, Qualcomm was one of the best companies I ever worked for, even if it was for only 3 years. I loved them. I still do. Thank you Qualcomm.

To all you Microsoft workers, I wish you the best. Make the most of your exit packages. I think you will be fine if you’re open to new opportunities. Good luck and Godspeed.

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