Sega Saturn was what really killed Sega, not the Dreamcast. Also, it was more mistakes of the timing of the release, failure to pull in software companies (Sega kept running them off with bad decisions), and wasteful spending. I think Sega didn't believe that their ideas would fail because frankly in someways they had the best ideas and put them out first. The problem was marketing these ideas and keeping them in a reasonable price range which Sega failed to do. Oh well, I still say Sega's future is with Nintendo and they seem to be acting that way.
The Saturn was such a terrible console at a time when there were two legitimate competitors. The Dreamcast I thought was an amazingly revolutionary console.
The combination of the Saturn being a major letdown (and thus people turning from SEGA's future), terrible financial management (SEGA should have saved money; instead, they have lost tons of it over the years), poor sales projections, poor advertisement, poor timing, poor business decisions, the growing strength of the PlayStation and Nintendo brands, and the ultimate arrival of the Xbox ultimately led to the Dreamcast's demise.
Agree with poster above that Microsoft has too much money to be the next Sega at the moment but if their bread and butter (Windows) continues to fail, they may get in trouble. Video Gaming is a very small side part of Microsoft's company.
I don't think Video games is a small percent of the company (I'd say like 15% minimum), but they do have the resources to "fail." And even if they do "fail," they can reset in like 3 or 4 years and start the next console generation prematurely. They got the pockets to do that.
If they are smart they'll make an expensive console (like the Xbox 360) and release it at least a year early and bulk it up with games if that happens.
Although if Microsoft is really smart they'll stop saying crazy crap and doing these unthinkably stupid things and go back to doing things that make people want to get the console.
That means making games, not placing restrictions and price tags on everything, and making the multimedia actually something new. Truth be told the Xbox One looks like a powerful console, so literally they should be 1/4th the way to success, but they are failing at 1/2 of the "Big picture" stuff in the worst ways possible.
Video games are meant to unleash your imagination and take you to new unrestricted worlds, not make you feel restricted and like you're getting robbed.