The Internet of Things (IoT), that catch-all phrase describing the tens of billions of new devices that hook up to the internet, is still a work in progress. Microsoft (NASDAQ:MSFT) and AT&T (NYSE:T) recently announced that they're teaming up on a new service for large enterprises that want to deploy network-connected devices. AT&T is running point, making use of Microsoft's tech know-how to make it easier for enterprises to get devices connected to a network.

A city skyline with illustrated bubbles filled with electronic device and 5G symbols in them.

Image source: Getty Images.

Microsoft and AT&T's announcement is actually a continuation of the partnership they unveiled in 2019, in which AT&T migrated its non-network operations (i.e., those not specifically related to its mobile communications network) to Microsoft's cloud computing service, Azure. AT&T is now building the new service using Azure Sphere, a cloud-based IoT ecosystem that includes chips and related hardware, software, and security.

The idea is for companies to easily deploy and manage their connected products on AT&T's mobile network at scale. Use-case examples include healthcare providers (connected medical equipment), manufacturers (industrial equipment), retailers (surveillance cameras and point-of-sale terminals), and commercial real estate and apartment owners (elevators and lights).  

On its own, this IoT announcement isn't going to generate massive growth at either Microsoft or AT&T. For the telecom operator, the new initiative is part of an ongoing evolution of its network, which is no longer limited to voice and text. AT&T is expanding the reach of the internet so that all devices can access the cloud directly without wires -- and it's not alone. Verizon also recently announced the planned expansion of its 5G network integrated with Amazon's AWS Wavelength to bring edge computing to additional cities. T-Mobile started its 5G Open Innovation Lab to foster use of its next-gen network.

But these initiatives aren't going to send companies like AT&T back into high-growth mode. The era of mobility expansion was 2010. For public cloud operators like Microsoft's Azure and Amazon's AWS, picking up myriad partners -- including network operators like AT&T -- is simply further testament to the fact that the era of cloud computing is the investing megatrend of the moment.

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