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Sony weds wireless with AOL, Nokia

The consumer electronics company unfurls major alliances that will likely fuel an ongoing rivalry with Microsoft.

LAS VEGAS--Sony unfurled major alliances Monday with AOL Time Warner and Nokia as part of its ongoing, years-long effort to become one of the defining and dominant companies of the Internet era.

The new alliances will also likely fuel Sony's ongoing rivalry with Microsoft.

In his keynote speech at Comdex Fall 2001, Sony President Kunitake Ando announced that his company would be working with AOL Time Warner to develop a broadband network, new forms of digital entertainment, consumer electronics devices and a new Internet browser.

"We're working together to build the next generation of broadband consumer experiences," Ando said.

AOL Time Warner Chairman Steve Case, addressing the audience via live satellite feed, added: "This will be an alliance for the long haul that will encompass many different projects. Convergence is going to be the wave of the future, and that future is not so far away."

Sony, which makes cell phones under its own name and through a joint venture with Ericsson, also announced it has reached an agreement to ensure its devices are interoperable with rival Nokia's phones.

These alliances underscore a strategy enunciated by Sony several years ago to marry its film and music properties and consumer product expertise with the Internet. However, these projects have remained in the planning stages to date. Sony's PlayStation 2, for instance, was developed with the Internet in mind, but the company has yet to launch an online gaming service. For years, Sony has also been investigating how and when to provide broadband service.

With AOL Time Warner, Sony has found a partner with a huge subscriber base in dial-up access as well as a content library that can rival its own.

AOL Time Warner, meanwhile, will find itself teamed with one of the world's premier consumer companies. Last year at this time, America Online and Gateway discussed plans that involved the PC maker developing several consumer electronics products. But by March, Gateway all but abandoned its consumer electronics strategy.

Analysts were interested in Monday's announcement but concerned about the lack of details about the arrangement. Regardless, some felt the coalition was struck to challenge Microsoft's encroachment into home entertainment.

"It's not encouraging that there weren't a lot of specifics because...anti-Microsoft coalitions that don't have a clear purpose have a slim chance of succeeding," said Ross Rubin, an analyst at research firm Jupiter Media Metrix.

Technology with feeling
Although AOL Time Warner and Sony did not provide details on the network, Ando said one feature will be simplicity. Sony is working on a home-networking technology called Feel that it says will make it easy to hook up devices to a network. Ando said third-party companies will be able to build products that can join Feel networks.

"Sony is developing more interfaces like Feel to create a more human environment," he added.

Under Feel, devices are able to join wireless networks on their own or through a simple command. In one demonstration, a Sony product manager wirelessly networked a Sony handheld and a notebook through a click of a button. Through a few more clicks, he was able to transfer digital photographs from one device to another.

"Nobody should have to be a systems integrator to make a convergence network work in their home," said AOL Time Warner's Case. "It is still too difficult for most people to connect the dots."

These plans, though, will direct Sony toward a head-on collision with Microsoft. The software company has been promoting its own home-networking standards. Additionally, it is coming out with its own game console, the Xbox, this week and promoting consumer electronics devices such as the upcoming Tablet PC. Meanwhile, AOL Time Warner and Microsoft are engaged in a bitter war for viewers at home.

Microsoft is also working on a smart phone, code-named Stinger, that will compete with Sony products.

Through its new AOL Time Warner alliance, Sony is aiming at Microsoft with plans such as developing an Internet browser. The browser, presumably to be created by AOL Time Warner's Netscape Communications division, would power Web surfing throughout devices in the network. Netscape's Gecko browser technology was developed as an engine for viewing Web pages on devices.

But AOL Time Warner and Sony may find it difficult to overtake Microsoft's dominant Internet Explorer browser. Even AOL Time Warner uses IE in its proprietary online service.

"In the business environment, traditional browser wars have been fought and won by Microsoft," said John Corcoran, an analyst at CIBC World Markets. "But this is them circling around to determine if there are other opportunities focusing on entertainment products."

This is not the first time Sony and Microsoft have clashed. Sony executives put on a similar presentation at Comdex in 1999. At the time, one of the big holes in the company's strategy was an Internet service provider.

AOL Time Warner offers high-speed service via satellite, as well as DSL (digital subscriber line) through partnerships with BellSouth, Qwest Communications International, SBC Communications, and Verizon Communications. The company is also launching its own high-speed Internet cable service.

And, like the 1999 presentation, Sony brought up celebrities and entertainers from its stable. Tobey Maguire and Kirsten Dunst, stars of the upcoming "Spiderman" film, joined Ando on stage as did an Afro-Caribbean band.

News.com's Jim Hu contributed to this report.