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Sony aims to control the digital living room

In the growing market for home networking, Sony isn't willing to put all its eggs in one basket, partnering with Sun Microsystems as well as Microsoft.

In the home networking market, Sony is hedging its bets.

The electronics giant has a partnership with Sun Microsystems, as the two have been working together since January on consumer electronics devices such as stereos and video cameras that can communicate over home networks. Yet recent deals with Sun rival Microsoft show that Sony isn't willing to put all its eggs in one basket.

Sun and Sony expanded their partnership yesterday by announcing a program to develop software that will connect home networks to the Internet. Not only that, but Sony chief executive Nobuyuki Idei and Sun cofounder Bill Joy are scheduled to share the stage next week at the Comdex trade show in Las Vegas.

But the deals shouldn't be taken as a complete endorsement of Sun technology, such as Jini "spontaneous networking" software that allows gadgets network together. Less than two weeks ago, Sony emerged as one of the companies that will help to define a competing technology from Microsoft called Universal Plug and Play.

"Sony is positioning itself to be a partner with all the power brokers," Cahners In-Stat analyst Michael Wolf said. The company doesn't care so much about which networking standards will emerge as it does about making sure it retains its powerful position in selling consumer electronics devices.

"Sony would like in the future to control the digital living room," he said.

At stake is who gets to control home networking standards of the future and, consequently, who benefits from product revenue or royalties. Many analysts expect home networks to be a huge business, though so far the concept is cluttered with dozens of technologies and competitors and still has yet to expand much beyond connecting PCs and printers.

"The only uncertainty is how quickly the market will adopt the notion of having different types of devices connecting to the Internet," said Parks Associates analyst Hongjun Li. "The PC is still the major device people use to get Internet access, though more and more are using cell phones or PDAs. I don't know how many people want to connect stereos or TVs to the Internet."

Sony looks ahead
Sony has aspirations to expand into "gateway" devices that will help connect home networks to a high-speed data pipeline to the Internet. One aspect of the plan is to sell advanced set-top boxes--increasingly sophisticated computers that connect to cable TV lines--as one way to establish these "broadband" connections to the Internet.

In September, Sony announced a $1 billion deal to supply New York cable TV company Cablevision with set-top boxes.

Sony also believes high-powered game consoles could serve as the hub of home networks and the connection to the Internet, Wolf said. The PlayStation 2 eventually will include a broadband modem, he added.

Yesterday's announcement detailed plans for Sun and Sony to develop gateway software that would provide the outside connection to the Internet for gadgets on a home network. Under it, the two companies will customize software called the Java Embedded Server to work with Sony services on Sony's corporate networks, said Samir Mitra, director of business development at Sun. "That's where their information and databases reside," Mitra said.

Different vantage points
Sun sells powerful servers and now is trying to push its Java and Jini software onto gadgets such as VCRs and Palm Pilots. If that strategy works, it could be a financial boon for Sun, which would earn royalties on each device that uses Java or Jini.

Java, which theoretically allows a program written once to run on a multitude of devices, is an important feature in a world where there are lots of different types of hardware, Li said.

Microsoft, on the other hand, has its stronghold in PCs and is trying to expand from there. Its upcoming operating system Windows 2000 will come with "hooks" for Universal Plug and Play, meaning that it will be able to take advantage of Universal Plug and Play networking software when the technology becomes available, Wolf said.

"[Universal Plug and Play] doesn't need a Windows operating system to be on a network, but I imagine the first devices a year or two down the road would be PCs leveraging this technology," he said.

Sony comes from a consumer electronics background. Along with seven other consumer electronics companies, Sony is working on a technology called Home Audio-Video Interoperability, or HAVi. Similar to Sun's Jini and Microsoft's Universal Plug and Play, HAVi will allow devices to identify themselves and what they can do when plugged into a network.

HAVi devices aren't yet available, Araki said.