Sega denies ditching Dreamcast

Sega executives in the US have denied reports that the company is to quit the games console hardware market, and have refused to comment on speculation that it is to make games for Microsoft's Xbox platform.

According to a story in today's Nihon Keizai Shimbun newspaper, the entertainment company is to end manufacturing of its Dreamcast console in March and concentrate on developing gaming software. Separate reports this week also suggest that Sega is to create software for Sony's PlayStation 2.

In a statement, Sega bosses said that the company has made no announcements regarding the manufacture of its Dreamcast console or on any developments for other video game platforms.

However, some analysts believe that the number three console supplier is keen to concentrate on porting the Dreamcast platform to other devices, including mobile phones and personal digital assistants.

P J McNealy, an analyst with researcher Gartner, said: "It is really expensive to be in the hardware business because companies lose money each time they sell a console." He added that Sega's strength is its software business. "Sega has some good developers and some good stuff that it could sell to other hardware manufacturers," he said.

Last September the company launched SegaNet, an online gaming network that lets users around the world play against each other. It also dropped the US price of the Dreamcast console by 25 per cent to $150 as Sony prepared to launch PlayStation 2 and Microsoft ramped up publicity for the Xbox.