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Nem said:
I'm sure that was what SEGA was thinking.

Unfortunely there is more to it than that. It's perceived value of the product. Not only the "upgrade" but the vanilla versions. There is nothing to gain from this in the long term.

Sega used upgrades that cost $300(CD) and $400(32x) respectively(and this was in the 90's). The problem with upgrades is that you can't sell the original console, wich makes it very expensive.