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Microsoft, Sony partner on streaming games, chips and AI

(Reuters) – Microsoft Corp and Sony Corp on Thursday said they struck a strategic partnership in which Sony would use Microsoft’s cloud for streaming games and media, and the two work together on the development of new image sensors.

A Microsoft logo is seen, a day after Microsoft Corp’s $26.2 billion purchase of LinkedIn Corp, in Los Angeles, California, USA June 14, 2016. REUTERS/Lucy Nicholson

The deal is at an early stage, with many details yet to be determined. But the owners of the two most important consumer interactive entertainment franchise for Microsoft’s Xbox platform and Sony’s PlayStation would work together to stream games and content to consumers and provide game creators new development tools.

“For many years, Microsoft is an important business partner for us, although of course the two companies are also competitors in some areas,” Sony Chief Executive Kenichiro Yoshida said in a statement. “I believe that our joint development of future cloud solutions provide a major contribution to the progress of the interactive content.”

The deal strengthens Microsoft’s Azure cloud computing business, which helped the Redmond, Washington-based company’s market value past $1 trillion last month. It also helps Microsoft counter cloud market leader Amazon.com Inc Amazon Web Services.

Amazon has also jumped into the gaming market, the game makers new technological tools, and with its nearly 1 billion dollar acquisition of Twitch, a major destination for gamers to watch other players compete in the e-sports market.

Japan’s Sony is also a major supplier of camera chips for smartphones and other devices. Sony and Microsoft said they have the potential to develop new image sensor chips that make use of Microsoft’s artificial intelligence technology for business customers. The two companies did not indicate how the chips would be used.

Intelligent cameras are currently used in applications such as the spotting of the defective items from production lines with a greater accuracy than human inspectors.

Sony and Microsoft said they would investigate how the use of Microsoft’s AI tools in Sony’s consumer products “to offer a very intuitive and user-friendly AI experiences.”

Microsoft’s technology for tasks such as recognizing images and the understanding of human speech is generally assumed to be competitive with the better-known rivals Alphabet, Inc.’ s Google, but the focus on business customers has left fewer outlets for the technology that consumers touch. Sony on the other hand, makes a wide range of televisions, phones, and other consumer devices.

“Sony has always been a leader in both entertainment and technology, and the partnerships we announced today builds on the history of innovation,” Microsoft Chief Executive Satya Nadella said in a statement.

Reporting by Stephen Nellis in San Francisco; Editing by Kenneth Li and Dan Grebler

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