Microsoft considered buying Sega at one point

Microsoft had originally considered acquiring Sega has a quick and less expensive way to enter the console race, but Bill Gates at the time put the kibosh on the deal, stating Sega “lacked muscle” in the console race.

According to former Microsoft employee Joachim Kempin in an interview with IGN, ”There were three companies at that point in time, I think this was (Sony,) SEGA and Nintendo. 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.”

Considering the fate of the Dreamcast, Gates might have saved Microsoft a world of hurt.