New cloud partnership between Microsoft and Sony was negotiated behind PlayStation’s back

Perhaps, the media and OnMSFT included were a bit premature in crowning the news of Microsoft and Sony’s new partnership as a “match made in heaven” for the companies’ respective console endeavors.

According to an article from Bloomberg, the deal for the two companies to collaborate on streaming technologies, data-center co-development and intelligent camera applications, was done so without Sony’s PlayStation division’s knowledge.

Ironically, much of the known details regarding Sony and Microsoft’s partner announcement last week centered around co-development of hardware, software and cloud services that would seemingly benefit the PlayStation division’s efforts with PlayStation Vue, PlayStation Now game streaming and its consoles memory and power management by offloading processing power to the cloud.

Bloomberg reports that negotiations for this particular agreement began over a year ago and were handled mainly by Sony’s senior management in Tokyo and, “largely without the involvement of the PlayStation unit.”

Despite Sony spending several years investing in its own proprietary cloud services, the company ultimately chose a third party vendor to help power its streaming and, to some extent, cloud gaming future.

Why Sony chose to partner with its bitter console competitor, is unclear at this time when both Amazon and Google pocket vast cloud computing infrastructures. Asymmetric Advisors strategist Amir Anvarzadeh gleaned a bit of  Sony’s threatened posturing from the company’s recent decision and summed the decision as such:

“Sony feels threatened by this trend and the mighty Google, and has decided to leave its network infrastructure build-up to Microsoft,” said Asymmetric Advisors strategist Amir Anvarzadeh. “Why would they sleep with the enemy unless they feel threatened?”

On the news of the monumental partnership Sony’s shares ticked up 9.9% and the day accounted for the single best day in the past 18 months for the company. Investors are rewarding Sony for its forward-thinking decision as well as the many structural changes that preceded it, such as moving some of the more staunch PlayStation Now staff to other divisions to make way for a more collaborative future for the business.

As of now, the agreement details regarding any effects on the PlayStation and Xbox businesses remain ambiguous, but the potential gains for both companies seem clear. In the near term, Microsoft and Sony stay in lock-step against new competitors to the gaming market such as Amazon and Google and force game developers to choose where to put invest their resources. In the long run, Sony and Microsoft could ultimately solidify game development on Azure cloud and could also create an additional revenue stream for Microsoft’s cloud business.

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