Tech majors Microsoft (Nasdaq: MSFT) and Sony (NYSE: SNE) put aside their differences this week and joined hands to explore innovations in artificial intelligence and direct-to-consumer offerings. Following the news, shares of the companies made solid gains on Thursday.

As per a memorandum of understanding signed between Microsoft and Sony, they will launch an initiative to ramp up their gaming and content streaming services by incorporating the Azure cloud solutions. Also, the existing Azure data center solutions will be used for the relevant services of Sony.

On the AI-front, they intend to jointly develop innovative smart image sensors, while also upgrading Sony’s consumer products with the pioneering AI technologies of Microsoft.

On the AI-front, the companies intend to jointly develop innovative smart image sensors

The association aims at giving a tough competition to the new players in the gaming space, including biggies like Google (GOOG) and Apple (AAPL). The deal assumes significance as it could put an end to the ongoing rivalry between Microsoft and Sony for supremacy in the video game console market. Meanwhile, further details of the partnership are not known yet.

It is viewed as a strategy to stay ahead of rivals in the gaming sector, which is undergoing a rapid transformation, especially after the arrival of 5G wireless technology. When it comes to delivering high-speed gaming content and graphics on the next generation networks, Microsoft’s massive data centers will play a crucial role in ensuring efficiency.

Currently, the conventional console-based games of Microsoft and Sony are being challenged by the mobile gaming services offered by the likes of Tencent, a China-based technology company.

Moreover, the entry of Google and Apple into the gaming arena is a cause for concern as they are already supported with the required infrastructure, in the form of large data centers.

Microsoft’s stock traded up 2% Thursday afternoon, while Sony gained about 4% and crossed the $50-mark.

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