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

s
Division said the advent of GPRS is the next stage in the development of
mobile networks.

“GRPS is also the first stage in the move towards third generation
networks,” Hally said. “This investment in a core group of specialists will
further strengthen our knowledge and leadership in the GPRS market, and
will provide further resources for network operators worldwide who, like
us, are learning from each new success.”

Motorola demonstrated its first mobile data transfer over GPRS on a live
network in the U.K. last November, using its GPRS core network solution. British Telecom affiliate BT Cellnet announced it would launch
the world’s first GPRS service for the corporate market on June 26, 2000.