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Making Sense of Microsoft’s Pacts with Sony, Oracle, and Apple

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Microsoft in pacts with its rivals

Around mid-May, Microsoft (MSFT) entered a strategic partnership with Sony (SNE), with the companies saying they will collaborate to create new cloud-based solutions for the videogame market. On June 5, Microsoft and Oracle (ORCL) announced that they will connect their respective cloud computing platform in what is viewed as an alliance against Amazon (AMZN), which currently dominates the global cloud market. Microsoft said its pact with Oracle would allow both of them to better serve their shared customers. On June 11, Microsoft and Apple unveiled an all-new iCloud app for Windows, hoping to better serve their shared customers. There are people who own an iPhone but also use Windows computers. The new iCloud app is designed to make it easier for Windows computer users to access their files on iCloud, Apple’s cloud storage service.

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Microsoft looking at the bigger picture

Sony, Oracle, and Apple are all Microsoft competitors in some ways. Therefore, Microsoft seems to be trying to set aside some business rivalries if it believes that working with a rival could help it achieve its bigger-picture goal. In the videogame market, for instance, Microsoft and Sony compete for gaming console customers, but Sony is ahead with its PlayStation devices and collection of games. Microsoft looks willing to work with Sony despite their competition if doing so will allow it to capture a larger share of the videogame market. According to data from Newzoo, the global videogame market generated $134.9 billion of revenue in 2018, with Tencent (TCEHY) capturing a 15% share of the market, followed by Sony with an 11% share. Microsoft came in third with a 7.3% share.

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