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Microsoft CEO Satya Nadella and John Donovan, the former AT&T Communications CEO who retired in October. (Microsoft Photo)

Microsoft and AT&T today unveiled the first big plan as part of their multi-year cloud alliance: Combining AT&T’s burgeoning 5G network with Microsoft’s edge computing services to speed up Internet of Things devices’ processing power.

The two companies are working together on new Network Edge Compute technology, opening a preview in Dallas with plans to expand to Los Angeles and Atlanta next year. The technology will eventually allow high-powered devices, such as augmented reality glasses, autonomous cars and drones to get smaller and more nimble because most of the processing will be done over the 5G network, eliminating the need for big computers to be installed on the gadgets themselves.

“With our 5G and edge computing, AT&T is collaborating uniquely with Microsoft to marry their cloud capabilities with our network to create lower latency between the device and the cloud that will unlock new, future scenarios for consumers and businesses,” Mo Katibeh, executive vice president and chief marketing officer of AT&T Business, said in a statement. “We’ve said all year developers and businesses will be the early 5G adopters, and this puts both at the forefront of this revolution.”

The two companies announced their partnership back in July. The deal, which Reuters reported is worth more than $2 billion, will see Microsoft become AT&T’s preferred cloud provider.

AT&T will migrate most of its non-network workloads to Microsoft’s Azure cloud servers by 2024. AT&T is in the midst of outfitting “tens of thousands of employees” with Microsoft 365 apps, including Microsoft Teams, SharePoint and OneDrive, as well as Windows 10, the companies said.

The two companies have teamed up before on a tracking and detection system for drones, network projects and blockchain solutions. Microsoft and AT&T promised more initiatives for both businesses and consumers in the “coming months and years.”

In addition to the tech partnership, the companies said in July they would team up on “social good” initiatives. There was no mention of any social good projects in today’s update, but the companies have said they are both focused on “addressing sustainability, accessibility, and community challenges such as homelessness and see an opportunity to support each other’s work to address urgent social needs.”

Both companies are in the midst of fierce technological competitions. Microsoft’s cloud division is trying to catch up to the incumbent power Amazon Web Services and notched a big win last month when it secured the $10 billion Pentagon JEDI contract. AT&T is locked in a 5G race with Verizon and a potential combined force of T-Mobile and Sprint.

AT&T said its 5G network today serves 21 cities, with a nationwide expansion planned for next year. Rival T-Mobile plans to launch its nationwide 5G network Dec. 6.

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