What made Microsoft succeed where Sega could not?

[slowmo]

I just don't get the lazy answer of money, the situations were completely different. Sega mismanaged themselves into failure over a 5 year period during which time they released lots of bad hardware. By the time the Dreamcast came, all faith in the brand was practically gone, I really didn't bother about it and neither did my friends who had been Sega fans since their teen years.

Microsoft haven't had it easy entering the business like Sony and Sega. Sega entered at a time when the industry was just recovering. The fact Nintendo had licensing policies that pushed third parties towards the Sega platform helped enormously, let's not forget that the arcade division of Sega pretty much made their brand too with the promise of the arcade experience in your home.

Sony had most of the development of the PS1 split between them and Nintendo, they had a free leg up into the market. Shrewd marketing and poor decisions by both Nintendo and Sega allowed them to get a strong foot hold. Once established they went on in strength, the PS2 was sailing on the crest of a wave, all the best franchises seemed to be on the console and the price was right compared to rivals.

Microsoft have entered the console market going up against the best selling console of all time, they had limited time to build first party studios and they made a poor decision on hardware that meant they struggled for the next 4 years to reduce costs. They had no help from their competitors making mistakes to get a foothold, they've spent a lot because they've had no choice. Had the RROD not occurred the sales figures today would be very different and you can be assured the original Xbox debt would have been recovered.

Microsoft may have spent money to build to where they are now but that isn't the reason they've stayed here, they've actually ran a reasonably tight ship but paid a hefty price for a couple of mistakes.