Telecoms giant Vodafone has announced a significant 10-year partnership with tech giant Microsoft. This collaboration aims to advance generative AI, digital enterprise, and Cloud services for over 300 million businesses and consumers across Vodafone’s European and African markets.
Under this agreement, Vodafone will allocate $1.5 billion towards the development of customer-oriented AI, leveraging Microsoft’s Azure OpenAI and Copilot technologies. This move is expected to phase out physical data centres, favouring more cost-effective and scalable Azure Cloud services.
In a reciprocal arrangement, Microsoft will become an equity investor in Vodafone’s managed IoT platform, which is the largest global IoT platform and is set to be established as an independent entity by April 2024. Microsoft’s involvement will also extend to enhancing Vodafone’s mobile financial platform in Africa.
The specifics of the agreement include
- Generative AI: To increase customer satisfaction, the companies will apply the power of Microsoft Azure OpenAI to deliver frictionless, real-time, proactive and hyperpersonalised experiences across all Vodafone customer touchpoints, including its digital assistant TOBi (available in 13 countries). Vodafone employees will also be able to leverage the AI capabilities of Microsoft Copilot to transform working practices, boost productivity and improve digital efficiency.
- Scaling IoT: Microsoft intends to invest in Vodafone’s new, standalone global IoT-managed connectivity platform, which connects 175 million devices and platforms worldwide. Vodafone also plans to become part of the Azure ecosystem making the IoT platform available to a vast developer and third-party community using open APIs.
- Africa digital acceleration: Microsoft intends to help further scale M-Pesa, already the largest financial technology platform in Africa, by housing it on Azure and enabling the launch of new Cloud-native applications. The companies are also launching a purpose-led program that seeks to enrich the lives of 100 million consumers and 1 million SMEs across the African continent. The goal is to enhance digital literacy, skilling and youth outreach programs, as well as offer digital services to the underserved SME market. The partnership aims to boost financial services innovation, building a community of certified developers.
- Enterprise growth: Vodafone will extend its commitment to distributing Microsoft services, including Microsoft Azure, security solutions and modern work offerings such as Microsoft Teams Phone Mobile, as part of its strategy to become Europe’s leading platform for business. This enables business customers to deploy Microsoft’s Cloud-based services at pace with low adoption and running costs, as well as support the estimated 24 million SMEs across Europe through the provision of a managed platform that grows with their business.
- Cloud transformation: Vodafone will accelerate its Cloud transformation by modernising its data centres on Microsoft Azure. This will improve its responsiveness to customers, while simplifying and reducing the operational costs of its IT estate. As a result, Vodafone will be able to replace multiple physical data centres with virtual ones across Europe, simplifying and reducing the operational costs of its IT estate, as well as reducing energy requirements and helping deliver against its sustainable business strategy.
Vodafone’s Chief Financial Officer, Luka Mucic, expressed enthusiasm for Microsoft’s AI expertise, particularly in its alliance with OpenAI: “That’s the part that is really going to catch each and every one of our customers.” He emphasised the transformative impact of Microsoft’s AI leadership, particularly its OpenAI collaboration, on Vodafone’s customer services.
Microsoft’s Chief Commercial Officer, Judson Althoff, highlighted the strategic importance of Vodafone’s IoT and financial services capabilities. Althoff mentioned the use of “digital twins” by Microsoft to model manufacturing environments in the Cloud, enabling process improvements, saying: “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.”
The partnership also focuses on Vodafone’s M-PESA mobile money platform, operational in several African countries, including Kenya and Tanzania. Althoff expressed excitement about introducing generative AI features to aid customers in making more informed financial decisions, aligning with shared goals of enhancing digital literacy in the region.
Commenting to IoT Insider, Luc Vidal, Head of M2M/IoT Business and Mobility at BICS – a Mobile digital communication company – believed the move is indicative of IoT’s growth and the growing interest in digital twins’ IoT equivalent, ‘connectivity twins’: “Vodafone’s partnership with Microsoft shows the sustained growth we are seeing for IoT service and will likely only fuel increased attention in ‘connectivity twins’. They’re the missing piece enterprises need to virtually clone IoT devices, including their connectivity components, for a single real-time view of their end-to-end IoT solutions, along with all device and application components. Digital twins turn device-centric information into a business visualisation allowing more efficient decisions.”
Vidal went on to explain how IoT’s growth will only fuel connectivity twins as a concept deployed in the sector as networks expand: “As the volume of IoT devices continues to ramp up, these connectivity twins will be essential for enterprises to troubleshoot problems faster, better predict downtime and maintenance, facilitate end-to-end security, and improve overall service quality. Without these, businesses deploying IoT will effectively be blind, lacking real control over their systems and devices.”
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