Sega ‘lacked enough muscle’ to be acquired by Microsoft

Microsoft decided against acquiring Sega to enter the console market as it deemed the company lacked the muscle to compete with Sony, a former Microsoft exec has claimed.

Speaking to IGN, former VP of Windows sales Joachim Kempin said Microsoft had seriously looked at buying Sega to make a new console, given the high costs of creating hardware.

Despite licensing Windows CE to Sega to run on its hardware, Kempin claimed this wasn’t enough for Microsoft, and in the end Bill Gates didn’t think Sega was strong enough to oust rivals such as Sony’s PlayStation.

As a result, Microsoft decided to enter the console market with its own hardware, and launched the first Xbox in 2001.

"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 materialised, 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. There were some talks but it never materialised 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."

Kempin also revealed that Microsoft attempted to work with Sony in an effort to get into the home console space, but the PlayStation outfit had refused to work with the computing giant.

As a result, Microsoft set about creating its own Xbox hardware in an effort to stop Sony from achieving the kind of dominance on televisions that Microsoft had enjoyed on PC.