Microsoft Corp.’s and Sony Corp.’s rivalry in the videogame industry is pretty fierce by anybody’s standards, so today’s announcement that they’re teaming up to improve their respective gaming platforms comes as a big surprise.

The companies’ chief executives, Satya Nadella (pictured, right) and Kenichiro Yoshida (left), said they’re planning to “collaborate on new cloud-based solutions for gaming experiences and AI solutions.”

Neither company said much about what that collaboration will entail, but the scope of the partnership would appear to be a pretty large one. The collaboration will see Microsoft and Sony “explore joint development of future cloud solutions in Microsoft Azure,” with a focus on their respective video gaming services.

Sony already provides games streaming via its PlayStation Now service, while Microsoft is looking to break into the segment with its Project xCloud, which is still a work in progress.

It seems as if the companies intend to work together in order to improve both of those services. Part of the initiative will revolve around “building better development platforms for the content creator community,” for example.

Microsoft and Sony also appear to be coming together to try and stave off the threat to their gaming platforms from Google LLC, which earlier this year announced plans for its own Stadia game streaming service that won’t require a video games console. Instead, users will be able to stream games directly from Google’s cloud to the Chrome browser, Chromecast devices, and Pixel smartphones.

But the partnership between Microsoft and Sony could give them a capability that Google cannot offer, said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy.

“I believe [Sony] is partnering with Azure as its cloud platform to extend its gaming platform,” Moorhead said. “Gamers would love to see cross-platform play and operationally, given both xCloud and Sony’s streaming service would be on the same cloud platform, it would be much easier to have a lower latency community gaming experience. This would be very powerful.”

The partnership doesn’t stop at gaming, though, as Microsoft and Sony also said they’re going to work more closely on building semiconductors and artificial intelligence technology. The idea is to pair Microsoft’s Azure AI service with Sony image processors for enterprise cloud and edge workloads. Microsoft will also integrate its AI platforms with some of Sony’s consumer products, it said.

While some might think it strange that two such intense rivals are willing to partner so closely, analyst Holger Mueller of Constellation Research Inc. said it’s not so different from Netflix Inc.’s partnership with Amazon Web Services Inc. Despite their rivalry in streaming video, Netflix runs its entire infrastructure on Amazon’s cloud.

“Sony knows it needs a cloud for its next-generation gaming experiences and to scale its e-sports applications,” Mueller said. “It doesn’t have one, can’t afford to build one, so its picked Microsoft as its partner. It’s a remarkable win for Microsoft, though we should remember that things in Japan tend to move slowly, so the immediate impact with regards to Azure load and revenue will be slow.”

The partnership is still in its early stages, but the companies said they’ll provide more information about their work together at a later date.

Photo: Microsoft