Dreamcast also wasn't helped by Bernie Stolar's outright disdain for the Saturn. He said at E3 1997 that "The Saturn is not our future." He actually wasn't wrong, but lot of third party developers and Saturn consumers were really pissed off about what Stolar said. It did poison the well a bit for the Dreamcast, especially in light of how the Saturn had followed the Sega CD and 32X, two other platforms that Sega dumped pretty quickly with little support. At that point Sega had painted a pretty clear picture of itself as a company that couldn't guarantee a long-term install base. If Sega couldn't be bothered to support their own platform, why should anybody else support it?
Nintendo was sweating bullets about the PSP. It was a pretty impressive little gadget, and people thought it was going to repeat the PS2's success in the handheld front, which would have led to complete ruin for Nintendo. It even had Grand Theft Auto on it. I got a DS in its launch year, but didn't know what to make of it. The DS turned out to be a really good handheld in the end.
Sega didn't have enough money to survive enough to see broadband become a standard without a home console. They might as well not have bothered with the Dreamcast and just done Virtua Fighter and Sonic Adventure as PS2 launch titles in that scenario. They'd also have been going head to head against the Xbox by that point.
Well if DC was somehow able to get DVD it would have greatly helped esp in Japan where PS2 was primarily bought as a DVD player with Matrix in 2000. One thing SEGA could have done entirely is what they planned to do with Sony for Saturn but with MS this round. License their name and have MS make the system. SEGA tried to do that with Saturn and Sony but those talks fell apart. SEGA's name in 1999 which still meant something with MS money.