A day after Microsoft unveiled its Copilot Pro, the tech giant is now doubling down on its AI feature by signing a 10-year deal worth $1.5 billion with Vodafone. Microsoft CEO Satya Nadella stated: “This new generation of AI will unlock massive new opportunities for every organisation and every industry around the world.”
As part of the deal, Vodafone will invest in customer-centric AI developed using Microsoft’s Azure OpenAI and Copilot technologies to replace physical data centres with cheaper and more scalable Azure cloud services. In turn, Microsoft will become an equity investor in Vodafone’s managed Internet of Things (IoT) platform, which already connects 175 million devices and platforms worldwide when it is spun off into an independent company by April, helping expand Vodafone’s mobile finance platform in Africa.
Moreover, the deal enables Microsoft to power Africa’s largest financial technology platform, M-PESA, on Azure and launch new cloud-native applications. For example, Vodafone and Microsoft will launch targeted programs to enrich the lives of 100 million consumers and 1 million small and medium-sized businesses across Africa.
Main Objective of the Vodafone and Microsoft Deal
The main objective of this collaboration between the two companies is to develop new digital and financial services for SMEs across Europe and Africa over the next decade. For example, like the programs to enrich consumers and businesses in Africa we touch on above, the deal also aims to improve digital literacy and youth outreach programs and offer digital services to the underserved SME market on the continent.
Nevertheless, it is a massive gamble for Vodafone, as Margherita Della Valle, Vodafone Group chief executive, previously acknowledged that she is under pressure to return the group to profit growth. By identifying an opportunity to help businesses digitise and noting in May that the addressable market was worth 140 billion euros, the company quickly began its plans with Microsoft.
As per the words of Valle, the company “has made a bold commitment to the digital future of Europe and Africa” and hopes that the partnership will “accelerate the digital transformation of our business customers, particularly small and medium-sized companies.”
What Were the Deciding Factors for Vodafone and Microsoft Before Signing?
According to a Vodafone spokesperson, Vodafone’s decision to seal the deal relied on three aspects – their goal to provide a personalised and differentiated customer experience by improving its digital assistant chatbot TOBi using Microsoft Azure OpenAI service, Microsoft’s investment in IoT and cloud transformation.
With cloud transformation serving as the breath of the deal, Vodafone plans to move workloads and data from around 50,000 on-premises servers to Microsoft’s public cloud. In addition, this migration will also simultaneously improve Vodafone’s responsiveness and reduce operational costs associated with its IT infrastructure.
As for Microsoft, Microsoft’s Chief Commercial Officer Judson Althoff stated Vodafone’s strength in IoT and financial services is strategically crucial for them. He explained: “The IoT assets are critical in helping us address the sustainability needs of many of our customers in hard-to-abate sectors. Vodafone’s IoT stack allows us to go into those environments, model the environment, create large-scale data stores, and use AI to help customers meet their sustainability goals and to help customers make more intelligent financial decisions.”
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Will Vodafone’s Deal With Microsoft Pay Off?
Serving as the third-largest mobile network operator in the United Kingdom, Vodafone’s deal with Microsoft, one of the biggest tech giants, will verify sustained IoT growth. Luc Vidal, a leader in IoT business and mobility at international connectivity provider BICS, stated that the Vodafone-Microsoft partnership accurately represents the sustained growth of IoT services.
He stated that the deal “will likely only fuel increased attention in connectivity twins”, which he describes as “the missing piece” needed for enterprises to virtually clone IoT devices for a real-time view of their devices and application components. In addition, he stated: “As the number of IoT devices continues to grow, enterprises will find they need connected twins to improve troubleshooting, improve downtime and maintenance prediction, and improve overall quality of service. Without these, businesses deploying IoT will be blind, lacking real control over their systems and devices.”
Thus, with the groundwork already laid out and the future goal of becoming Europe’s leading provider of business platforms, it is down to how the two companies utilise what is at their disposal to achieve their targets.
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