Sega, Microsoft To Make Game Machine?

Sega Enterprises Ltd., a major Japanese video game maker, refused Monday to comment on a report it is planning to develop a higher-powered video game machine with Microsoft Corp.

The Nihon Keizai Shimbun said in its Sunday editions that Sega plans to develop a 128-bit home-use video game machine through a venture with Microsoft. The two companies will officially sign an agreement as early as October, the report said.

A Sega spokesman, speaking on condition of anonymity, said the company has been in talks with Microsoft on developing products, but said the types of products the two will develop are yet to be finalized.

A spokesman in Microsoft’s Tokyo office said Microsoft is now discussing selling “Widows CE,” an operating system software for use in personal computers, to the Japanese maker.

But Microsoft has not made a decision on whether it will form any sort of business link with Sega, said the Microsoft spokesman, who also spoke on condition of anonymity.

The new video game machine would be the most powerful in the industry, surpassing Sega’s 32-bit model and rivals such as a 64-bit machine made by Nintendo Co.