Microsoft wins multibillion-dollar cloud deal from AT&T

All AT&T Communications employees will use Microsoft 365, which includes Windows 10 and Office 365.
AT&T will move applications to Microsoft’s Azure cloud.
The deal is not exclusive, as AT&T announced a separate deal this week.
Microsoft just scored a marquee deal for its cloud business, announcing on Wednesday that AT&T will use the company’s Azure infrastructure and move most of its employees to the Microsoft 365 package of productivity apps and security services.

The multiyear deal is worth more than $2 billion, according to a person familiar with the matter who asked not to be named because the terms are confidential. For Microsoft, which is chasing Amazon Web Services in the cloud infrastructure market, AT&T represents both a hefty buyer and a highly-recognizable brand with significant data storage and computing needs for its over 250,000 staffers.

Many of Microsoft’s big wins of late have come in the retail market, where companies like Gap, Kroger, Albertsons and Walmart’s Jet.com don’t want to finance Amazon, their biggest competitor, especially as the e-commerce leader pushes further into physical retail. AT&T is a longtime customer of Microsoft and, in moving its technology to the cloud and the latest apps, underscores how Microsoft can use its existing position in the enterprise market as an advantage over AWS.

“The ability to work with someone who has a really strong track record in how enterprises are creating, recreating themselves into a digital form is a very important part of why we selected Microsoft,” John Donovan, CEO of the AT&T Communications business, said in an interview with CNBC.

The deal is not exclusive, and AT&T is permitted to use other cloud providers in addition to Azure, Donovan said. On Tuesday, IBM announced a deal with AT&T that involves cloud migration.

Microsoft investors are counting on continued expansion out of Azure, which grew 73% in the latest quarter, though the company still doesn’t break out numbers from the business. Its achievements in cloud have been the driving force behind Satya Nadella’s success since he was elevated to CEO in 2014, and have catapulted Microsoft past $1 trillion in market cap to become the world’s most valuable publicly traded company.

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