AT&T & Microsoft Extend Tie-Up for Secure IoT Cloud Services

AT&T Inc. T recently extended its alliance with Microsoft Corporation MSFT to facilitate secure and seamless cloud connectivity of IoT devices by diverse businesses across the globe. The partnership is likely to sow the seeds of technology convergence of secure cloud computing and intricate network management skills to help businesses unlock customer value.

Per the latest deal, the companies will aim to deliver an integrated IoT solution with Azure Sphere — a high-level application platform with hardware, operating system and cloud services along with built-in communication and security features for Internet devices. This guardian device combines the secured architecture of Azure Sphere with Azure IoT services and AT&T’s core network to provide an end-to-end solution for connecting machines and equipment to the cloud, bypassing the need for public Internet. This, in turn, ensures data security and eliminates the need to connect to Wi-Fi through a third-party network connection that may not possess high security standards.

In addition to a fast and secure activation out of the box, the solution enables businesses to retrofit existing equipment into ‘smart’ devices that are digitally connected through highly secure network to the cloud and Azure IoT Central. This solution can be deployed across the globe, enabling a broad array of industries to quickly transform their operations through massive IoT deployments, thereby simplifying operations, better managing costs, and becoming more agile.  

Notably, AT&T had earlier collaborated with Microsoft to introduce 5G technology and advanced edge computing solutions to select customers in Dallas, TX. Dubbed Network Edge Compute (NEC), the trailblazing technology combined AT&T’s network edge capabilities and Microsoft’s Azure cloud services to accelerate innovation and apply cutting-edge technologies for enhanced data infrastructure.

NEC is focused on providing a low latency experience for enterprises, bolster core network capabilities, stimulate innovation for its customers and empower workforce while minimizing operating costs. Revamping the multi-year cloud collaboration deal struck in July 2019 with a valuation of more than $2 billion, the tech juggernauts aim to introduce integrated industry solutions, including intelligent edge and networking along with public safety. Microsoft will be the preferred cloud provider for non-network applications, as part of AT&T’s broader public cloud first strategy, and support the telecom giant as it consolidates data center infrastructure and operations.

Moving forward, AT&T anticipates gaining a competitive edge over rivals through edge computing services that allow businesses to route application-specific traffic, where they need it and where it’s most effective — whether in the cloud, the network or on their premises. Through its Multi-access Edge Compute (MEC) solution, the company offers the flexibility to better manage data traffic. The MEC leverages indigenous software-defined network to enable low-latency, high-bandwidth applications for faster access to data processing. AT&T expects edge computing solutions to be widely available in autonomous vehicles, drones, robotic production lines and autonomous forklifts in the near future. Utilizing machine learning techniques and more connected devices, this could transform the way data-intensive images are transferred across the industry on real time basis.

The stock has lost 23.7% over the past year compared with the industry’s decline of 0.8%.

Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. A couple of better-ranked stocks in the industry are Cambium Networks Corporation CMBM and GCI Liberty, Inc. GLIBA, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cambium has a long-term earnings growth expectation of 20%. It beat earnings estimates in each of the preceding four quarters, the surprise being 126.4%, on average.

GCI Liberty is currently trading at forward P/E of 14.6x.  

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