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Sega, Motorola to Develop Internet Cell Phone

Video game console-maker Sega Enterprises Ltd. Monday agreed with Motorola Inc. to jointly develop a new cellular phone that can access the Internet.

The two companies plan to develop new software that allows mobile phones to hook up to the Internet and process high-speed data transport much like Sega's Dreamcast home game machines operate over narrowband Internet connections.

The game-capable cell phone is scheduled to be launched during the spring of next in the U.S. and will be able to download games and video as well as other forms of data from the Internet. Financial terms of the deal were not disclosed.

Sega has aggressively pursued Internet ventures as the conduit to revive its fortunes. Last month Sega reported a net loss for a third consecutive year, prompting the resignation of its chief executive Shoichiro Irimajiri.

Sega estimates that at least 10 percent of gamer's worldwide would use Internet services for access to its online gaming lineup.

In April, Sega announced it planned to enter the Internet-based telecom business worldwide. That announcement came just weeks after the firm unveiled a radical shift in its business strategy to offer its own Internet-related services in the U.S.

Sega and AT&T Corp. formed a strategic network gaming alliance in August 1999 to launch Sega's Dreamcast network in September. As a result of the deal AT&T WorldNet Service became the preferred U.S. Internet service provider for the new Network.

Although AT&T is the preferred ISP for Sega Dreamcast, consumers who already have online access through their personal computers are able to access the Sega Dreamcast Network through their current ISP.

Sega's wired-Internet access deals out maneuvered rivals Sony Corp. and Nintendo Co. Ltd. in the race to market similar built-in connectivity offers on game consoles.

But Sony's online gaming strategy is targeted toward broadband Internet access to maintain rich gaming graphics through high-speed cable and digital subscriber line service providers, where Sega's wireless initiative would provide stripped down graphics for mobile game access.

Nintendo's online game console is currently scheduled for public release in August.

According to the Interactive Digital Software Association online gaming is expected to surge to 26.8 million users by 2002, with more and more gamers taking a leap to the Net for a multi-player experience. An IDSA study indicated that 55 percent of console gamers in the U.S. reported that the ability to play games with multiple users is very important.

Although Sega did not release its U.S. research gathered to determine the market for mobile gaming over cellular phones, the ability to grab a game and go makes for an interesting development in its attack on Nintendo's popular GameBoy portable hardware.

Motorola Monday also announced it would next spearhead its General Packet Radio Service mobile data initiative in Germany.

Motorola has already put its GPRS developments and integration skills to work in the U.K., Ireland, Spain, Chicago, and Vancouver.

With the explosive global growth of the wireless Internet, Motorola is continuing to buildout its end-to-end solution for mobile data transport. Due for completion later this year the Motorola's wireless network is designed to overlay GPRS technology through its existing GSM networks to allow the rapid transfer of data to and from mobile phones.

Ted Hally, Motorola vice president and general manager of its GSM System



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