Microsoft never bought Sega because it didn't have 'enough muscle'
There was a time when Microsoft was pondering purchasing Sega. You all know how that story turned out: Microsoft never acquired the company and went on to create the Xbox line of video game consoles. So why exactly did the deal never actually go down? How did we get to this point? According to former Microsoft employee Joachim Kempin, Bill Gates didn't think Sega had "muscle."
"There were three companies at that point in time, I think this was [Sony], Sega, and Nintendo," said Kempin. "There was always talk maybe we buy Sega or something like that; that never materialized, but we were actually able to license them what they call Windows CE, the younger brother of Windows, to run on their system and make that their platform."
"But for Bill [Gates] this wasn’t enough, he didn’t think that Sega had enough muscle to eventually stop Sony so we did our own Xbox thing," explained the ex-Microsoft staff member. "There were some talks but it never materialized because SEGA was a very different bird. It was always Sony and Nintendo, right? And Nintendo had some financial trouble at that point in time, so Sony came out with the PlayStation and bang! They took off, and everyone else was left behind."
I think Microsoft did pretty all right (Yay understatements!) for itself when it launched the Xbox. Sadly, the failure of the Dreamcast was not only enough to transform Sega from a console manufacturer to solely a publisher and developer — it was also enough to keep Microsoft from acquiring it.
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