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shikamaru317 said:

Sega made alot of mistakes during that time period:

1. Designing the Saturn with 2 CPU's/GPU's which made it difficult to develop for
2. Releasing the Saturn too early in the West with very few games
3. Not releasing games from many of their most popular series on Saturn (no Sonic 4, Streets of Rage 4, Ecco the Dolphin, no Phantasy Star, etc.). Those games would have helped boost the Saturn's sales.

But to be fair to Sega, they were faced with a difficult task, the biggest Electronics company in Japan had just decided to make a game console and Sega knew that Sony would need to get through them before they could reach the top spot. Sadly alot of the things they did to try and counter Sony had the opposite effect, the more powerful 2 CPU/GPU console also made the console more difficult to develop for, which chased some devs away. The early release blew up in their faces because they didn't have enough games available.

If Sega hadn't made those mistakes we could be looking at very different gaming market nowadays. Sega would likely still be making consoles, I do feel confident in saying that. The Saturn's failure lead to the Dreamcast's failure even though they did everything right with the Dreamcast, they had just lost too many Sega fans to Sony and Nintendo the previous generation because of the Saturn. If Saturn had been more successful then Dreamcast would have been more successful.

Even without such mistakes I don't really know if they would have suceeded. I really like Sega a lot, but they have never generated as much cash as Nintendo, as you said they were not as big as Sony (and then MS), and their very strong point were the arcade games and their console adaptation. Their other strong point was building excellent hardware, custom chips in partnership with japanese electronic makers, and that advantage would have disappeared facing modern architecture that tend to be standard (the very last try of a custom chip was the PS3 cpu, with heavy investisments, and it failed). Even without mistakes, facing MS, Sony and Nintendo would have been very tough for Sega.