This is a great article, but another *big* reason for its failure that is glossed over is the release and failure of the 32X.
Keep in mind that while the 32X came out as an add-on for Genesis, it was the 32-bit "Next-gen" console release from Sega and at a full new console price at the time of it's release. Purchasing it wasn't just buying another controller, this was full console pricing.... just like the SegaCD. As such, people who bought into it expected good support, good graphics and a longer life than it had. When released, it was buggy from the gate, only had 36 games released and was quickly put to pasture.
This raised serious doubt in the mind of Sega fans as to the ability to produce the next console and that the support there would be if it faltered. Also consider, many just bought the "Next-gen" console add-on at the price of a full console not too long ago and to drop more money on the Saturn was just not feasible.
Sega burned a good bit of it's userbase by releasing the 32X and I think that had a pretty significant impact from where it counts most... customer loyalty and trust. They would have been better off just waiting for the release of the Saturn. And I say all of this as first hand experience, I dodged the 32X bullet and bought one when they went on firesale, I also bought Sega CD used... but when the Saturn was released, I doubted it would last after seeing the 32X debacle. I decided to pass.
As an aside, I think the Sega CD was underrated, I actually enjoy many of the games available on it, and the 32X while endearing, just lacked the ability to compete with the true next-gen consoles in regards to performance, game data storage and support - again, a few good games, but no where near what the next gen consoles could pull off, and therefore casting a shadow of a doubt on what Sega would release next.