A strange courtship
One of the most interesting events to watch during March 2000 was the under-the-table offer by Microsoft to buy out Sega of America. The reason was pretty obvious. Microsoft wanted Sega's expertise and technical ability to buck up its own XBox project. Speculators were even surmising that such a move would, in effect, turn XBox into "Dreamcast 2," since Sega probably didn't have enough money left to release a successor console. According to several independent reports reports, promising initial talks between Sega and Microsoft quickly broke down over two key issues: Dreamcast back-compatability and the Windows operating system. Sega wanted XBox to be back-compatible with Dreamcast if it was to have any say in XBox hardware development. This Microsoft refused to permit, and Sega reportedly balked at the high cost of making new Dreamcast titles compatible with the evolving XBox standard. Also, Sega did not want to have to be constrained to Microsoft's requirement that all videogame console development be done under the bloatware environment of Windows. Even WindowsCE was rather hefty for its claimed compactness, and that was the prime reason why Sega preferred to stick to its own proprietary APIs insofar as Dreamcast development was concerned. The whole affair began and ended in a matter of days, but it market an interesting juncture in the unusual relationship between the world's best known arcade videogame manufacturer and the world's largest software company. The move reportedly brought a temporary halt to Microsoft's XBox plans, but at the same time it left Sega free and clear on the 128-bit market for a little while longer. Sega was quite willing to work with Microsoft and would do so again, but in this case the asking price was just too high. In retrospect, the failure of the deal may have had something to do with the pulling of the planned ports of several popular PC entertainment titles by Microsoft on the Dreamcast, but Sega didn't mind the loss. It now had more than enough Dreamcast titles released or in the development pipeline to make up for their absence, anyway.
On 10 March 2000, Microsoft's Bill Gates officially unveiled the XBox. "Building on our strengths as a software company," Gates said during the official press briefing, "Microsoft has developed XBox which will offer game developers a powerful platform and game enthusiasts an incredible experience. We want XBox to be the platform of choice for the best and most creative game developers in the world." XBox was a DirectX/PC based videogame console running on an Intel Pentium III 733 MHz CPU, based on an nVidia G-Force derived graphics chipset. It had three times the horsepower of Sony's PlayStation 2; in fact, it was far and away the most powerful entry into the 128/256-bit nexgen wave, outclassing all other consoles in every category. XBox was slated to hit the videogame market in the fall of 2001 and had the support of practically every major Western third-party software vendor and a fair number of prominent Japanese ones. Microsoft announced a US$250 million ad campaign designed to promte its impending X-Box videogame console - a figure that made every other console vendor blanch in shock. SegaWeb's Craig Hansen was quick to quip, "Bill Gates is cursing both heaven and hell that he has no one like Yu Suzuki in XBox's corner," due to the fact that it did not appear that all that many quality software titles would be available for the new console's launch; however, a few days later, however, MCV reported that merger talks between Sega and Microsoft have not broken off as previously reported, but were quietly continuing "along different lines." As the weeks and months rolled on and XBox news continued to build steam, rumors begin to surface that Sega and Microsoft were close to a mutual agreement regarding their respective consoles. Sega was rumored to have begun software development for XBox, and in exchange Microsoft was going to include some form of Dreamcast back-compatability with its new überconsole.
Two months later, on 25 May 2000, Sega's Isao Okawa set the record straight. Microsoft was not playing a major role in Sega's Dreamcast plans, including online gameplay, and never would. In response to questions, he also confirmed that Sega was asked to help Microsoft develop XBox. The deal fell through due to "mutual disagreements." Concerning the future of Sega and Microsoft's relationship regarding the Dreamcast, Okawa stated that "... Sega will not enlist the help of Microsoft. We're done with them." Many industry insiders promptly comment that Microsoft more or less used Sega and the Dreamcast as a proving ground for certain early XBox ideas and that Sega did not like this fact once the intrigue was discovered; however, Sega seemed to have realized the potential profits of software development for Microsoft's new console and decided to swallow its pride. In the light of what was to come for Dreamcast, it seems to have been a prudent move.
