Almost every video-game machine ever built sits somewhere in Russell Davidson's bedroom in Mountain View, Calif. The Atari 2600 his parents bought him for his fifth birthday in 1979 is packed in a box in the corner, beside a ColecoVision that dates bac
k to 1982. A 10-year-old Turbo GrafX rests on the rug next to his bed
(and his Empire Strikes Back comforter), a Sony PlayStation right by his
new 36-in. TV. But the one he's got plugged in and ready to go is the
Sega Dreamcast that he bought in January from a small import shop near
San Jose. He paid $500 for it -- double the current street price in
Japan, where it started selling last November -- and about $700 more to
bring home 11 of the 12 games made for it so far.
Davidson, a network engineer who built his own computer from scratch, just couldn't wait until September, when Sega is expected to start selling the Dreamcast in the U.S., most likely for around $200. "The graphics are head and shoulders above the othe
r platforms, including the PC," says Davidson while expertly running Sonic, Sega's trademark blue hedgehog in red sneakers, through loop-the-loops at a dizzying speed. "Your PC would have to have serious hardware to get graphics this good." He points out
textures and other visual details that don't blur as he flies past them. But the Dreamcast's biggest advance, he says, is the detachable modem that lets Dreamcast gamers play against one another in cyberspace. "Of course," he adds with a grin, "I haven't
figured out how to use it yet. The setup is all in Japanese."
Davidson is just the sort of guy Sega needs to impress if it is even to begin to win back favor in the incredibly competitive-and at $6 billion a year, incredibly lucrative-video-game market. Hard-core players like him are the first to buy new gaming h
ardware, and a good early run would help Sega convince game developers that it's a machine worth developing for. A steady stream of snappy titles from talented developers is essential for enticing other (less fanatical) gamers to buy a Dreamcast. More har
dware sales lead to more software (where the real money is), and pretty soon you've got a hit. And Sega badly needs one. Once the leader with its Genesis machine, Sega watched Sony devour its market share when the two went head to head in 1995 with the Sa
turn and the PlayStation. Nintendo sealed Sega's fate when it brought out the Nintendo 64 the following year. In 1998 Sony had 58% of the market, Nintendo 39%, and Sega a measly 3%.
From the looks of it, Dreamcast could make Sega a player again. But it will be a tough fight. So far the early response in Japan has been tepid. Video gamers say they're impressed with Dreamcast's tech but not the current game lineup. Says Yasuaki Fuji
ne, an analyst at Salomon Smith Barney Japan: "Not even the maniac gamers are buying."
But the battle is just getting under way, and Sega, as well as Sony and Nintendo, has more to fear than the supposed three-way death match. Yes, a stranger has crept into their midst, a little-known company determined to sneak an entirely different sor
t of game machine into your living room. Silicon Valley start-up VM Labs has developed a chip it calls the Nuon, a media processor that can run games just as fast as, if not faster than, and just as rich as, if not richer than, any console.