from Dean Takahashi's book 'Opening The Xbox' pages 192-193:
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'Another plan involved buying Sega, the maker of the Dreamcast console. As far back as 1998, Microsoft had initiated talks to acquire Sega. The companies already had a working relationship since Microsoft provided software for the Dreamcast, but relations had soured in part because game developers didn't use that software. Sega was in third place with its console was still losing a lot of money.
Worldwide, Sega had barely sold 5 million units as of early 2000, giving it a base far smaller than Sony's estimated 73 million units. Moreover, the older Sony machine and the Nintendo 64 continued to outsell the Dreamcast. Sega had launched dozens of games in the United States, but only one of those titles, a football game, sold over a million units. Sega didn't gave the financial wherewithal to stay in the race, and that prompted third-party publishers like Electronic Arts to support the other consoles instead.
By buying Sega or otherwise investing $2 billion in the company, Microsoft could acquire not only the Dreamcast technology but a lot of talent that it didn't have, like Sega's nine game development studios--which had consistantly created hits like Sonic The Hedgehog, key sports titles, and Virtua Fighter. Sega also had a hardware design group that crafted new consoles.
Shoichiro Irimajiri, who was the CEO of Sega Enterprises in Japan, said his company was surprised to learn first from other game developers that Microsoft was planning to enter the console business. He was angry that he hadn't heard it from Microsoft first. His complaints led to meetings to discuss whether Microsoft and Sega could work together on the next-generation console. At first, he wasn't interested in selling out to Microsoft because the Dreamcast appeared to be doing well in the United States. The Microsoft side was equally lukewarm to the idea
"Every time we looked at them, we thought all we wanted was the software," said Chris Phillips, who managed the Sega relationship until he left Microsoft in early 2000. "They weren't willing to sell just their software business. They wanted Microsoft to do a box that could combine the Xbox and the Dreamcast2."
Yet like a bad rerun, Sega kept coming back and getting audiences with Bill Gates. One of Sega's top messengers was Kay Nishi, a former Microsoft employee and the CEO of ASCII in Japan. Nishi had a very close friendship with Bill Gates. Whenever he came to town, he could get meetings on short notice with Gates. He used that influence to get Gates together with Sega's top executives, Isao Okawa and Shoichiro Irimajiri.
In some ways, Sega was appealing. Some Microsoft executives had their doubts about the feasibility of coming up with a truly killer application that would drive people to buy the console over other systems. Ed Fries, who had confidence in his own game group of 700 developers, opposed the Sega deal because he believed Microsoft could create its own hit games. Irimajiri said Sega wanted Microsoft to make the Xbox compatible with the upcoming Dreamcast 2. Okawa also wanted the Xbox to run games made for the original Dreamcast.
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Brief: Some very interesting plans may be in the works at Sega. Including Dreamcast 2.
Reporter
Michael Custer
Date
6/12/2000
The Asian Wall Street Journal is reporting that Sega is in talks to license Dreamcast technology to other companies. Also, Sega is negotiating with various semiconductor companies to to form a joint venture that would build an advanced chip to power the next incarnation of the Dreamcast, as well as other devices. The JV could open as soon as October of this year.
"The future game box will be an all-in-one, set-top box," Sega Vice Chairman Shoichiro Irimajiri said in a telephone interview. "In that case, Sega's role is one part of many functions, so we cannot do it alone. We need very good alliances or a joint venture."
Apparently, Sega is already talking to potential licensees, including automobile companies, hardware makers, and satellite-television and cable-TV providers. These talks have been confirmed by Mr. Irimajiri.
The AWSJ reports that Mr. Irimajiri traveled last week to the U.S. and this week to Europe, to meet with up to 15 companies to discuss Sega's plan. He emphasized that the discussions are preliminary and he declined to identify the companies involved. "Everything is still unclear," he said. It looks like Sega is approaching NEC Corp., Hitachi Ltd., Philips Electronics NV; chip maker STMicroelectronics NV, who is making their own next generation graphics chip based on the PowerVR technology that powers the Dreamcast, and Imagination Technologies, the Company behind the PowerVR technology itself.
http://www.gaming-age.com/news/2000/6/12-69Quote:
Chip makers are the likely partners because Sega hopes to build a complex processor for use in Internet appliances, the people familiar with the plans said. Sega appears to be looking to put many functions of a game machine onto one piece of silicon, making it easy to integrate advanced computer graphics into other products.
http://www.gamasutra.com/newswire/ne...ex20000522.htmQuote:
[Tuesday, May 23, 2000]
Sega is confirming a shuffle of the top brass. As speculated, Sega Enterprises President Shoichiro Irimajiri will step aside to allow Isao Ohkawa, president of Sega parent company CSK, to takeover. Ohkawa is moving into the hot in order to oversee a massive restructuring of Sega's development activities. The reorganization plan, originally announced in November, will split Sega's interested into a total of nine separate units organized by region and specialty. Irimajiri will stay on in a vice presidential role to focus on the creation of a Dreamcast successor.
http://www.gamespot.com/news/2577163.htmlQuote:
Sega-Microsoft Ties Are Over?
* By Ike Sato, GameSpot
* Posted May 25, 2000 5:44 pm PT
Ties between Sega and Microsoft are over, and a possible successor to the Dreamcast emerges.
Nikkei Computer reports that ties between Sega and Microsoft are over -- the comment comes from CSK chairman and newly appointed president of Sega of Japan, Isao Okawa. In the past, both companies have had strong ties in the development of the Dreamcast console, where a customized version of Windows CE is used as the machine's OS. Sega has also been working closely with Microsoft's console Xbox, until negotiations broke down regarding a possible Dreamcast compatibility. Previously, it was mentioned that one of Sega's future roles with Microsoft was to become the OEM manufacturer of the Xbox, but with Okawa's recent comment, that possibility is now even slimmer.
"Sega will now be working on network-related projects without the help of Microsoft, and is currently developing the succesor to the Dreamcast - a completely separate hardware from the Xbox," Nikkei Computer reports.
At this point, Sega of Japan has not officially confirmed the existence of its new gaming console.
http://www.computerandvideogames.com...le.php?id=8642Quote:
The Japanese report also claims Irimajiri will concentrate his efforts on designing a successor to the Dreamcast, already known to have been in development for some years.
So Dreamcast 2 was not just some Sega fanboy's wish, it was in development. I'm sure Sega would have called it something other than Dreamcast 2, and it would've been something more advanced than the consoles/arcade boards such as NAOMI 2, the PS2/System 246, Xbox/Chihiro, GameCube/TriForce and Wii.
I'd imagine the successor to Dreamcast would've been something closer to Lindbergh board and Xbox 360, but perhaps using the canceled PowerVR Series 4 architecture. It's also not likely that Sega was merely thinking about it, but rather, actually developing it. Dreamcast launched in Japan in Nov 1998 and Sega officially exited the hardware market in early 2001, so I think there's little doubt they were working on something in those 2 to 2.5 years.
