IBM Japan has signed with games machine giant Sega Enterprises for development of an AT-compatible games computer. The new machine will be based on Sega’s Mega Drive games machine, says the Teleputing Hotline and will sell for under $600, quite cheap for an AT-alike in Japan. Sega will also offer a CD-ROM drive for use with it. The company’s reason for getting into bed with IBM is its bitter war with Nintendo Co, which has sold 15m Family Computer games machines in Japan. Sega launched the Mega Drive two years ago and has sold 2m so far. IBM Japan launched a low-end PS/55Z last year, but sales are slow. The new machine is to be marketed by IBM Japan, Sega and CSK Inc in Japan next year, and launched in the US later – but not necessarily by IBM.