It was really one area. The TV in the living room. MS feared that Sony would end up winning that with the PlayStation and then use their consumer electronics arm to have an integration stranglehold on the living room.

You have to remember that this started back in 2000 (or so). Nobody had a clear vision of Netflix or Roku or Hulu.

I don't think they ever worried that Sony would take Office, but I think the fear was that they would move computing to appliances and take Windows revenue... now that fear is the iPad will do it.