The dreamcast failed because Sega had pissed away its reputation. End of story.
Sega had a 60% market share against nintendo at its peak. But it fucked that up by dropping massively expensive add-ons that had no games are really pissed off its fanbase.
Sega CD
Sega 32X
These cost as much as a new system and only had about 16 games each.
Then Sega dropped the Nomad, which was virtually unplayable because it would kill a pack of batteries in about an hour.
The Sony Playstation absolutely buried the Saturn, because many of the saturn games were using polygon graphics. Which when they came out were revolutionary, but not as refined as what playstation was doing.
So when Sega finally got it right, an they did get it right with the dreamcast. It was too late. The games for dreamcast were great, they were the first to utilize cell shading, and first to offer internet playability. But they still couldn't get enough of the market to stay afloat.