While Microsoft has not publicly released a statement, by all accounts the company has blown up its Azure for Operators business.
Word of the implosion started with news reports that Microsoft let go of a large number of employees attached to Azure for Operators—these employees being from the acquisitions of Metaswitch and Affirmed Networks, both of which make up a large portion of Azure for Operators. As I’ve learned in discussions with multiple sources, it does appear that these reports are true, that the worst-case scenario of employee layoffs, as well as products’ end of life (EOL), has indeed occurred. We would expect a skeleton product support team is in place for the remainder of contract terms for the majority of clients.
For years, I was one of the sole industry analysts to cover service providers’ voice-over-IP and IP Multimedia Subsystem (IMS) infrastructure. When Microsoft acquired Metaswitch in 2020, it didn’t make a lot of sense. Being in the operator infrastructure market, especially selling core Class 5 switch replacement solutions, is very different from selling cloud capacity or enterprise services. I was vocal about this same sort of scenario when Mitel acquired Mavenir in 2015—a decision that took only two years to break apart.
As someone who covered Metaswitch extensively for 13 years, I know service provider customers loved the company. Metaswitch’s core portfolio included Class 4/5 softswitches, gateways, application servers for consumers and businesses, and session border controllers (SBCs). It had some IMS, but the business was relatively small and not a fit with their large base of tier 2/3 wireline telcos in North America.
Metaswitch had success in penetrating tier one providers worldwide with SBCs in particular, with expansion across Europe, parts of Asia and Latin America. As network elements such as SBCs and IMS core became increasingly software-based, putting these elements in the cloud made sense. Microsoft likely envisioned a wave of opportunity, and grew its operator business through acqusitions. However, the reality is that many operators were never going to put large pieces of core switching infrastructure into public cloud environments, and that wave of opportunity never materialized.
Where does this leave Metaswitch customers?
News of unhappy Metaswitch customers is widespread, and the reverberations will be felt for years to come. It would have made sense for Microsoft to sell the business, not to recoup costs but to put its customers into steady hands. It’s possible that this may still be a way out for Microsoft, but in the absence of that, operators have a few choices.
- Ribbon will be the big winner in all of this. First, it has the product and service expertise to manage Class 5 replacement products. It is the only vendor that can match the Metaswitch product portfolio of softswitches, gateways, SBCs, and app server for consumer services. We would not expect operators that have operational IP voice networks to rip and replace any time soon, but if Metaswitch parts along with service and support become unavailable, they may have little choice. Second, for the tens of thousands of Class 5 switches that still need to be decommissioned in the U.S. alone, Ribbon begins to win by default. These are not networks that need the complexity of IMS—eliminating the big three carrier infrastructure vendors (Ericsson, Huawei, Nokia).
- Alianza will pick up business from those operators willing to go all-in on wholesale cloud solutions. Additionally, Alianza will be able to fill the gap with business voice and unified communications (UC) services for those operators utilizing Metaswitch Max UC (which had been announced EOL).
- Point-product vendors, including Oracle for SBCs and NetSapiens for business application servers, are viable options. And wholesale UCaaS options from providers including Cisco, RingCentral, and Zoom, for Metaswitch customers looking for cobrand options from a third-party provider.
