As I understand it, these are the reasons Sega stopped supporting hardware in the middle of the Dreamcast era:
1) The previous Sega consoles did not do so well, putting Sega in a bad position going into the Dreamcast stage.
2) Sega was selling the Dreamcast at a loss, like many game console manufacturers do. The loss of money from selling dreamcasts did not work well for the company.
So the Dreamcast may have been a great console, but things were not going Sega's way at the time. That is what I believe happened.







