After all the rumour and speculation Sega threw in the towel yesterday on its Dreamcast console, announcing it's going to concentrate on making software.

"We have decided to stop production of the Dreamcast in March 2001," announced an emotional Hideki Sato, Sega's chief operating officer, at a packed press conference Wednesday evening. Instead, the company will look to software and licensing of its hardware.

Sega hopes to become a platform-independent software maker, it said, supplying games for not just the Dreamcast console but also those of its previous rivals. The plan also includes a move into games for personal computers and other devices such as mobile computers and cellular telephones.

Sega is moving fast to implement its new plan. It said Wednesday it plans to supply Java-based games to Motorola for use in cell phones and to Palm for use in the company's personal digital assistants.

Despite its decision to close Dreamcast production, Sega is not burying the system architecture. It announced on Tuesday a deal to build the Dreamcast architecture into cable TV set top boxes built by UK firm Pace, and is also looking to work with other companies in building the Dreamcast system into devices. In part to serve this market and its existing customers, Sega has plans for at least 26 games for the system this year.

Company president and chairman Isao Okawa bet heavily on the Dreamcast when he launched it in late 1998 and will himself pay dearly for its failure to make money for Sega. Okawa will give 85 billion yen (£497,398,332) of his own stock in the company to Sega to help the struggling company.