Dreamcast was a good console for its short lived time. A lot of forces worked against it, but a lot of forces also worked in its favor.

It used the Naomi 2 board which gave it arcade port access. It’s graphics were ahead of it’s time. It had very good first and third party support for its first year. 

The forces against it were Nintendo, Sony, and Microsoft. Each company played a significant role in Sega’s departure from the hardware business.

My question for you is, do you think Sega would have still folded if Microsoft hadn’t entered the console wars?

Sega.

I made this question well aware that Sega made missteps. But in terms of their competitors, who did the most damage… 

If Sega had no competition they would still be making consoles. 

Ps2 was a beast and could be all it took to do them in. A part of me started wondering recently though if Sega could have gained enough investors to stay in the race if it weren’t for the behemoth Microsoft making it impossible to find a niche. 

Didn't Microsoft enter the market after Sega folded?

Sony, without question. Obviously there were a lot of different factors at play, but of the three competitors Sony was the one that hurt Sega's console's the most. From the announcement of the PS1 price point of 299 at E3 1995 just hours after Sega had announced that Saturn would launch at 399 (though Sega certainly made their own mistakes as well, announcing that the Saturn would be out immediately without any warning given to developers and many retailers, which angered them.), and then the Dreamcast's sales plummeting as the PS2 was nearing release.

None. SEGA fucked themselves. They had Nintendo beat but the BS between SOJ and SOA led to bullshit like 32X and SEGA CD which undid the Genesis momentum. If Saturn did everything right PlayStation would not have had nearly the success it did. All Sony did was take advantage of their competitor's failings with PS1 much like PS4. By the time Dreamcast came out SEGA was already financially screwed.

Oh and Dreamcast didn't use Naomi 2. It used hardware similar to the first Naomi. N2 came later,

Yes but they were working on it while Sega was still in it and there are conspiracy theorist that theorize that people withing Sega were paid by Microsoft to make sure Sega folded to make way for Microsoft's console.

^ this.

Sega.

Sony did huge mistakes with the PS3 and Vita but they are still around.