Sega steps out of the video game hardware market 
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Friday, 02 February 2001

This week Japanese game machine maker Sega announced that they will no longer be producing their Dreamcast game console and will start creating game software titles for Sony and Nintendo's game systems. Sega plans to supply game content for popular Palm handheld devices and will license Dreamcast technology to U.K.-based Pace Micro's set-top boxes. Sega will also create new opportunities for its online gaming network SegaNet.

Nintendo and Sony have dominated the hardware market for the past several years and now that Microsoft is entering this arena with their new X-Box, Sega felt this was the best move to combat four years of financial losses for the company. The announcement pleased stockholders, pushing up shares of Sega up 2.7 percent to 1,690 yen on Wednesday January 31st. Its shares are up almost 75 percent since speculation mounted that it would abandon the hardware making business. In the U.S., Sega's over-the-counter shares rose 15 cents, or 4.3 percent, to close at $3.65.

Although Sega will stop production of their Dreamcast in March, it will continue to sell and support the game machine at least until the end of the calendar year. Beginning Feb 4, 2001 Sega will lower the price of the Dreamcast to $100 (US Dollars) to liquidate their inventory.

Source: CBS Marketwatch 1/31/01

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