I see 6 key reasons...
-Microsoft took advantage of Sony's stunning blunders (Sony seemed to be begging its competition to take market share from it with its price points and losing major 3rd party exclusives like GTA4).
-The 360 got an amazing amount of third-party support out of the gate unlike the Dreamcast. EA for example blamed the Dreamcast's choice of using an "unusual, non- industry standard, not well-supported chip" as one of their main reasons for not supporting the system.
-The Dreamcast didn't have major games on the scale of Halo 3, Gears of War, etc, to attract gamers to its console in the West. Most of it's games were relatively Japanese centric which didn't resonate as well with the much larger American market.
-The 360 had the advantage of an already well established online service to attract even more console gamers to the system.
-Sega was on financially shaky ground while Microsoft had enough money to secure exclusive content and to heavily promote its console and games.
-Sega had lost of trust with some gamers and was seen as going downhill at the time the Dreamcast was released. Even though Microsoft had stopped short the Xbox's lifespan it didn't seem to resonate like the series of failed hardware that Sega had put out.







