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Microsoft (MSFT) Inks New Collaboration With NEC: Key Takeaways

Zacks Equity Research
·3-min read

Building on more than four decades of partnership, Microsoft MSFT recently inked a new multi-year collaboration with Japan-based NEC Corporation. The companies are working together to provide public sector as well as enterprise customers with enhanced digital services.

Microsoft will also help NEC in increasing the number of engineering staff at NEC that specializes in Microsoft’s technologies to facilitate seamless digital transformation for NEC customers.

NEC is utilizing Microsoft’s Azure as its cloud platform and will shift its on-premises IT environment to Azure. The company is also looking to implement Azure Virtual Desktop as well as various other Azure services for its 110,000-strong global workforce.

Apart from Azure, Microsoft 365 as well as NEC’s network and IT solutions (which includes 5G networking technology expertise) along with both companies’ Internet of Things (“IoT”) as well Artificial Intelligence (AI) offerings, will be utilized to help customers across various sectors to simplify their digital-transformation endeavours.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

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Microsoft and NEC intend to advance work on network innovation built on Azure platform for certain industries and enterprise domain, noted the software giant.

Accelerated Digital Transformation Bodes Well

Amid the COVID-19 crisis and subsequent lockdowns, the need for maintaining business continuity prompted enterprises to speed up digital transformation for their operations. Globally, enterprises rapidly migrated workloads to cloud and adopted several other digital technologies to enable work from home for employees and maintain business operations.

Digital transformation efforts aid in catering to changing consumer preferences by providing innovative/advanced products and services. Digital transformation also helps boost operational efficiency, enhances scalability and assists in complying with changing regulations.

Increasing implementation of advanced technologies like Big Data, robotics, AI, IoT along with accelerated 5G deployment is driving the market. Pandemic-triggered spurt in online services like shopping as well as cloud gaming and mainstream adoption of distributed/hybrid work model is fueling demand for latest digital technologies.

According to data from Mordor Intelligence, the digital transformation market was valued at $998.99 billion in 2020. The market is forecast to witness a CAGR of 18.5% between 2021 and 2026 and reach $2744.68 billion.

Microsoft is one of the well-established players in the domain. The company, which carries a Zacks Rank #3 (Hold), has captured a considerable share in the cloud market in a comparatively shorter time frame. Microsoft’s Azure trails only behind Amazon’s AMZN Amazon Web Services (“AWS”) in the global cloud space.

Azure’s availability in more than 60 announced regions worldwide, is also fortifying Microsoft’s competitive position in the cloud market. Azure's revenues jumped 46% at constant currency on a year-over-year basis driven by strength in consumption-based business in the last reported quarter.

Due to significant revenue potential, other cloud service providers like Oracle ORCL and International Business Machines IBM have amped up their efforts in the cloud arena, thereby intensifying competition.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.


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