Basically, Sega got hosed. The baggage that they picked up on the Sega Saturn, ended up sticking to the Dreamcast. Between that and the first-party games *from Sega itself* not always being up to snuff, it got to where third-party programmers were just leaving in droves.
And no....I don't think they'll make a home system again, not one you plug into a TV. They will make more arcade games, especially in Japan, where people *still like arcades* and not first-person shootery crap.
And they might make something *portable* with the right partner. You know, like a game system/iPod hybrid or a game system/cell phone hybrid, something where the bulk of the hardware support is shared and not entirely *out of their pocket*. I could see it happening mainly as an end-run around the whole "chicletware" crappy controller thing Sony started. As in, you get a portable game system with good quick tilt sensors, a two-point touch screen and a microphone for voice control. It would make more sense to me than *anything* Sony's ever done with their Four Chiclets of Doom and their Analog "nubs". >_<
But yeah. They really are hosed, and done, with the hardware side of things, at least here in the States, where people only want to twiddle their thumbs on linear chicletware all day where you *must* use all of the doodads to play.
o_o Blah. It sucks being left behind....I was once *so hooked* on video games....what happened? Oh yeah, *Microsoft happened*, and their PC gaming, first-person shooter nonsense *took a dump on video games in general*. >_< Grrr.....