Believe it or not, this is a very smart move by Sony. Their focus is on electronics, software and entertainment. They don't want to enter another competing market in order to ensure that their services stay up to date.
Microsoft has an already established cloud infrastructure, and contrary to what many fans might think, competing companies can work together for the best interests of each other.
As for your question, you might think of cloud computing as only SaaS (Software as a Service), like most people think with website hosting, but Azure offers entire virtual networks and virtual machines under their IaaS (Infrastructure as a Service) platforms on Azure. Their server farms are in many key locations through the world, and the service is very cost effective, when compared to hosting own hardware, sysadmins, etc.
One of the main concerns that I think Sony would be seeking is rapid scalability. For instance, under the proper conditions, extra resources can be automatically allocated to meet with spikes in demand. It eliminates the need for server hardware forecasting, downtime with setup/configuring etc, and eliminates points of failure through redundancy.
What is a virtual network? What is a virtual machine? What aspect of Sony's services would this be used for? How would it be used for that aspect of Sony's services? Are you saying that this doesn't have anything to do with streaming games?
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