Sega was hemmorhaging money before it hit the scene and was later selling their decked out console at a loss with the PS2, Gamecube and Xbox about to make everyone forget about it. It's a fun system that I still love, but there's no mystery as to why it was unable to rescue sega...
Truthfully, I don't think anything could have kept them in the console race after the Saturn debacle and the entry of Sony into the mix. Throw another company like microsoft that had almost unlimited resources and a willingness to lose a ton of money establishing themselves into the mix, and sega really had no hope... Nintendo was occupying the only room in the market they might have made use of and was in a far, far better financial situation.
To put it more simply, sega had the business savvy of Plankton from SpongeBob, and that won't get it done when mega corporations with the resources of Sony and Microsoft get involved.