Sega moots console hardware exit

Is Sega set to quit the games console business? According to the Gaming Intelligence Agency Web site, that's exactly what the company plans to do, in order to allow it to become an Internet and software company. Sega Enterprises chairman, Isao Okawa, apparently told a audience gathered together at the Okawa Foundation that Dreamcast, Sega's 128-bit, WindowsCE-based next-generation console would be the company's last. Some claimed that Okawa's comments had been incorrectly translated, but according to GIA, that's exactly what he said. "I will say that the future doesn't necessarily lie in the hardware business," said Okawa. "I think in the future there is the possibility of Sega becoming a software-only company... "Even if Dreamcast does sell, we will make that shift." Of course, there's no time-line for the transition, and from Okawa's comments, it's unlikely we're talking about a premature withdrawal of Dreamcast from the market. With the machine selling reasonably well in Europe, the US and Japan, and with Sony's PlayStation 2 still four months or so off, pulling out now would make little sense. But Sega is clearly worried about the effect of PlayStation 2 and Nintendo's rather more distant N64 successor, codenamed Dolphin. And it should be. The original PlayStation did for the Sega's 32-bit Saturn in no uncertain terms, and has easily outsold even the technologically superior 64-bit N64. Sony is going to promote the 128-bit PlayStation 2 is going to be promoted even harder than it did the PSX, not least because the Japanese giant has in mind a much bigger role for the device than mere games console. Even without Dolphin, that's going to hard for the much smaller Sega to compete with. The threat of Microsoft entering the market with its mooted X-Box PC-in-a-set-top machine may also have played a part in persuading Sega that it needs a new business plan. Sega's plan isn't (yet) to kill Dreamcast off, but rather to allow it to reach the end of its natural lifespan and simply not replace it with a Dreamcast 2 -- certainly it is continuing to develop peripherals for the machine. But with no upgrade path, would-be buyers may be tempted to leave Dreamcast well alone. That said, since a lack of backwards compatibility has never been a problem for Sega in the past, video gamers, unlike their PC-based brethren, might be more forgiving. ®