Sega was mortally wounded before the Dreamcast. All that money spent on the Sega CD, the 32X, the Neptune, the lackluster developement of the Saturn, making not one, but two Shenmue games (their budget was tremendous), SegaNET, and a lot of other things meant that the Dreamcast couldn't have fought the competition even if its sales were decent. The PS2 just nailed the final nail in the coffin.