The companies plan to co-develop an open broadband home network application to deliver content and services to devices such as PCs, televisions or stereos via telephone lines, wireless networks or satellites.

The companies also plan a jointly developed Internet browser specifically oriented toward broadband delivery.

Both Companies Benefit

AOL's 31 million subscribers and its experience in content distribution is a selling point for Sony. Nobuyuki Idei, chairman and CEO of Sony, said in a statement that the electronics maker intends to create a community of users that share common values and interests.

"Sony sells over 100 million units of consumer electronic devices every year, and by having these products network-ready, it will be possible for users to access a variety of content services," said Idei.

AOL's previous attempts at hardware development, such as AOLTV, the company's interactive television offering, fell short in the marketplace. With a focus instead on providing Internet access, content and easy-to-use applications, the Sony partnership could extend AOL Time Warner's reach.

"By working closely with Sony ... we will develop connected products and services for the digital household that are easy to install and easy to use," Steve Case, chairman of AOL Time Warner said.

This is not the first time that the two companies have joined forces. AOL Time Warner said earlier this year that the company intends to add its Netscape browser to the Sony PlayStation 2 game device.

Broadband Future Unclear

But so far, analysts have found broadband capability in the U.S. to be used more for practical reasons than for entertainment-oriented reasons.

A Yankee Group "Technologically Advanced Family" survey found last month that while 36 percent of families in the U.S. sign up for broadband access -- digital subscriber lines and cable modem access -- for the increased speed of the Internet, a quarter do so to free up their main phone line.

Only 2 percent of respondents used broadband services to watch video, listen to music or play games online.

Steve Vonder Haar, director of Media and Entertainment Strategies for the Yankee Group, told NewsFactor Network that the most important factor that would determine the success of the Sony-AOL partnership was where the broadband "pipe" would be connected.

Sea Change

"On the PC-side, it's all about delivering video with a purpose, not video for the couch potato. As you get digitization in the living room, those rule change. The important issue is where they aspire to deliver that content," said Vonder Haar.

Terming this the "year of the broadband PC," Vonder Haar believed the market is unclear as to which platform will be the venue for interactive multimedia content.

"We're on the road for a long march that is going to make interactive multimedia ubiquitous, and we've only taken the first step so far. We have a long way to go," Vonder Haar said.