The two competitors plan to "explore joint development of future cloud solutions in Microsoft Azure to support their respective game and content-streaming services", according to Microsoft's statement on the matter. "These efforts will also include building better development platforms for the content creator community", it added. The two have also agreed to "explore collaboration in the areas of semiconductors and AI".
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The big takeaway is that Sony will use Microsoft's Azure servers and data centers for its game and content-streaming services, which currently includes PlayStation Now and and PlayStation Vue. Mind you, Microsoft is already planning to use Azure for its Project xCloud service. Also, hosting PlayStation’s streaming services is a major win for Microsoft, which is trying to beat out Amazon Web Services.
Bringing the power of Azure and Azure AI to Sony to deliver new gaming and entertainment experiences for customers https://t.co/cMRKFE74Yk— Satya Nadella (@satyanadella) May 16, 2019
Their announcement also mentions the "joint development of new intelligent image-sensor solutions", which makes us think of the Azure Kinect sensor. Add it all up, and it sounds like the rivals want to co-develop future cloud solutions, which, presumably, will help advance game and content streaming for us all.
Both companies said they plan to “share additional information when available".