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Sega and Microsoft Announce Partnership for Saturn OS

Sega and Microsoft had a close working relationship in the 1990s. Many people are familiar with the custom version of Windows CE that Microsoft developed for the Dreamcast, or the games that SegaSoft developed for Windows 95 PCs. What is less commonly known, however, is that Sega and Microsoft apparently formed a partnership by January 1994 to work on an OS for the Saturn.

This post presents a series of contemporary news articles that chronicle this partnership. For those of you short on time, here is a brief summary (but I recommend reading the articles, which present valuable context):

  • Sega in Japan announced that they had formed a partnership with Microsoft, by which Microsoft would be developing an OS for the Saturn.
  • Microsoft did not initially acknowledge this partnership.
  • Details emerged that Microsoft would write an operating system for the Hitachi SH processor based on the Microsoft At Work kernel.
  • Microsoft VP Mike Maples confirmed that they were making an OS for Sega.
  • Several months later, it was reported that Microsoft were not working on a full-fledged OS, but rather a software interface to the CD-ROM drive.

It is unknown what came of this partnership, which was never reported on again as far as I can determine. The confusion in reports may reflect that Sega and Microsoft were still in discussions about what exactly the outcome of such a partnership would be. Sega’s stocks did see a strong increase in value after the initial report, though, so there may have been some incentive to play it up early on.


Nikkei Morning Edition, Jan. 17, 1994 (translated from the original Japanese)

Sega and Microsoft Form Game Console Partnership: Joint 32-Bit OS Development

Game company Sega Enterprises and American computer software company Microsoft have formed a partnership involving Sega’s new high-grade game console. Microsoft will be developing the OS (operating system) for Sega’s 32-bit home console, to be released at the end of this year, and both companies are also working together on the development of new game software. Sega’s new console is seen as an opportunity to promote the spread of interactive multimedia, and Sega and Microsoft, both with their eyes on this growing market, have joined forces.

Microsoft will provide the OS for Sega’s next-generation game console, the Saturn, which is currently in development. This console is designed for the coming multimedia era and features two 32-bit RISC (reduced instruction set computer) chips. With a price under 50,000 yen, it has capabilities similar to that of a personal computer.

Sega’s previous game consoles have not included OSs. With Microsoft supplying the OS for the Saturn, the capabilities of the machine will be enhanced, including support for character data and voice, high-definition images, and high-speed video processing. As a result, it will be able to function as a multimedia terminal capable of receiving cable television broadcasts and more, and game software development will become easier.

Microsoft controls 80% of the PC OS market, but they are also expanding into undeveloped areas. For that reason, they chose Sega’s new game console as an entry point to explore the use of OSs in such devices.

At the same time, Sega is carefully investigating the commercial possibilities of using its game console as a multimedia terminal. Moving forward, they are planning to pursue joint development with Microsoft on software that can be utilized in such future home terminals.


The Wall Street Journal, Jan. 17, 1994

Japan’s Sega Says Microsoft to Develop Operating Systems for Game Machines
By David P. Hamilton

TOKYO — Video-game maker Sega Enterprises Ltd. said Microsoft Corp. will develop software for its next-generation game machines — an alliance bringing closer to reality the much-heralded convergence of personal computers and videogame machines.

Microsoft will develop an original operating system for a planned Sega game machine called the Saturn, a Sega spokeswoman in Tokyo said. Microsoft officials couldn’t be reached for comment.

Operating systems control the basic functions of computers, making them easier to use and to program by providing a layer of user-friendly commands between a computer’s hardware and the user. Microsoft built its current empire largely on DOS, its hugely successful operating system for personal computers that are compatible with International Business Machines Corp. equipment.

Sega’s decision to add an operating system to its game computers is the clearest sign yet that game machines and personal computers are starting to jostle over the same turf. Adding an operating system to the Saturn may make it easier for game developers to write software for the machine. It also might give the Saturn the ability to serve as a so-called set-top box, a piece of hardware that someday may serve as a control for such multimedia functions as interactive television.

The move also is Microsoft’s first major step into the lucrative game-computer market, dominated by Sega and archrival, Nintendo Co. While it hasn’t previously entered the home game-computer market, Microsoft has aggressively pushed its Windows PC operating software as a standard not just for personal computers, but also for a variety of other hardware such as photocopiers and fax machines.

Sega declined to say whether Microsoft’s operating system for the Saturn would be compatible with PC software.

By signing up Microsoft, Sega is continuing to set the pace in pushing new technologies for the game-computer market. The company first released a CD-ROM player — a device that plays game software from compact disks — several years ago, a move that other game makers are only now starting to copy. Nintendo has yet to announce plans for a CD-ROM device. Sega also plans to introduce the first cable-TV video-game channel later this year in the U.S.

Analysts said the deal isn’t likely to have much effect on Sega’s introduction of the Saturn later this year. The significant factors affecting sales, they said, will be hardware pricing and the availability of hot new games — not whether the game computer can function as a set-top box.
The new alliance also could pose longer-term risks for Sega. By allowing Microsoft to control its operating system, Sega may be opening the door to erosion of its proprietary game-hardware standard — the main source of its huge profits.

“You can’t keep Microsoft from going out and signing contracts with all Sega’s competitors as well,” said Joseph Osha, an analyst with Baring Securities (Japan) Ltd. If that happens, the differences between different game machines, such as those from Nintendo and Sega, could vanish over time. With them would go much of the revenue those companies currently attract.


Reuters, Jan. 17, 1994

Sega story speculative – Microsoft

SEATTLE, Jan 17 (Reuter) – A spokeswoman for Microsoft Corp said a report that the company is developing an operating system for the Sega Enterprises Ltd is “completely speculative.” The spokeswoman declined further comment.

Earlier a spokeswoman for Sega said in Japan that Microsoft is developing the software for its “Saturn” high-performance game system due out later this year.


Electronics Times, Jan. 27, 1994

Microsoft Work at Hitachi – And Sega

Microsoft looks set to port its Microsoft At Work operating system to Hitachi’s new SH series of microprocessors.

Sega has said it will work with both companies on its 32bit Saturn game console due for launch next year.

The US company will write an operating system based on Microsoft At Work’s kernel, forcing it to port the software to the new chip.

Microsoft At Work was originally written for Intel’s 386ex processor as a way for both companies to `re-engage’ in the embedded control market. But a Microsoft spokeswoman said a hardware abstraction level version of the kernel already exists, making it easy to move it to other chips.

She said Motorola is working on a version of Microsoft At Work to run on its 68000 family of chips for its Wireless Paging and Data Group.


Reuters, Jan. 29, 1994

Microsoft Affirms Link with Sega
By Martin Wolk

SEATTLE (Reuter) – Microsoft Corp. Executive Vice President Mike Maples Friday confirmed that the company is working with Sega Enterprises Ltd. to develop an operating system for a new high-performance video game machine.

He said the venture is an indication Microsoft is moving beyond its announced plan to develop software for incorporation into office machines and plans to create more in the area of consumer electronics.

Sega said last week Microsoft is developing an operating system for its new “Saturn” machine. Sega has said the new 32-bit game machine, which could have the potential to download software through cable television lines, will be released this year.

Sega, one of the leading manufacturers of video game machines, makes the Sega Genesis game system and games with an animated character known as Sonic the Hedgehog. Nintendo has been a constant competitor for leadership of the video game market.

Last year Microsoft announced a programme called Microsoft At Work, under which it is working with dozens of companies to incorporate Windows-type software into a new generation of digital office products.

The first product in the At Work series was announced this week when Lexmark International Inc. launched a printer that incorporates Microsoft software for easier compatibility with word-processing programmes.

Maples said in an interview that the Sega venture represents an extension into consumer electronics of the At Work programme.

“It’s not a very broad extension to extend that same operating environment into consumer products like microwaves and telephones and game machines,” Maples said.

He pointed out that an increasing number of consumer devices are incorporating digital electronics, and he said consumers frequently have trouble programming such machines as microwave ovens and videocassette recorders.

He said adaptations of Microsoft’s Windows operating envrionment can be built in to make the devices easier to use.

Maples, one of a triumvirate of Microsoft managing executives, said consumer appliance manufacturers that use the company’s software will pay a royalty for each unit sold.

“It’s not big numbers per unit, it’s just lots of units,” he said.

Maples also said the company is working on an upgrade of its Office suite of applications for business use to take advantage of the powerful Chicago operating system due out late this year.

He declined to say when the new version of Office might be ready.


Financial Times, Mar. 10, 1994

Microsoft Plays Down Sega Video Game Role
By Louise Kehoe and Michiyo Nakamoto

The widely-reported collaboration between Microsoft, the world’s largest computer software company, and Sega, the Japanese video game manufacturer, now appears unlikely to create a significant role for Microsoft in video game software.

A senior Sega USA official said that Microsoft, contrary to earlier reports, was not developing an operating system for Saturn, the next-generation Sega video game machine. Such reports led many industry observers to conclude that Microsoft aimed to establish worldwide software standards in the video game arena, just as it has in personal computer software.

However, Mr Steven Payne, director of marketing for Sega USA, the US subsidiary of Sega responsible for the project, said that the software being developed with Microsoft for Saturn, a high-performance video game system under development by Sega, is not expected to include a ‘fully-fledged operating system’.

Microsoft officials said that they were precluded from discussing the company’s relationship with Sega by a non-disclosure agreement. However, they played down the strategic significance of the relationship, noting that Microsoft has focused and will continue to focus primarily on PC software.

‘Our relationship with Microsoft is evolving and it would be premature to say exactly what it will involve,’ said Mr Payne. However, he noted that current generation video game machines do not have an operating system; instead, video game software developers write code that directly addresses the microprocessor in a video game machine.

Saturn, an advanced video game machine under development by Sega, is expected to incorporate a CD-ROM drive as well as the familiar game cartridges. Microsoft’s involvement is understood to involve a software interface to the CD-ROM drive.

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