I think the 32x and saturn has to take a lot of the blame, they were both terrible designs. The Dreamcast wasn't particularly rushed.
Their biggest mistake at that time was partnering with Microsoft. It should have been obvious what would happen after Nintendo partnered with Sony on the original Play Station. All Sega got out of the deal was a crap DirectX port.
The Saturn wasn't that bad, the problem was that Sega didn't offer enough technical documentation to make programing to it easier.
The 32x was a pet project of Sega USA that was completely redundant, as Sonic 3d blast showed, Sega CD games could be perfectly be ported to the Saturn and kids already had a Sega CD.
Partnering with Microsoft was part of an old deal to port Sega games to Windows that basically went nowhere save for Sonic CD and the infamous Sonic 3 for PC.
Thing is, Sega wanted for some reason to expand to the PC market and back in the 90s that meant Windows.
Saying the deal with Microsoft ruined Sega is ridiculous since by the time the Xbox came out Sega already had huge economic problems.
The fight between Sega USA and SEGA Japan, the 32x and the head of Sega USA at the time only caring about sports games was the main reason the Saturn failed.
Is akso false rhe Saturn had no Sonic games.
It had Sonic Jam, the Sonic 3D Blast remake and Sonic R.
Thing is, the whole Sonic Extreme thing being canceled also helped to hurt the console.
Sonic the fighters was going to get ported to the Saturn but rushing the Dreamcast got that canned.
Looking back at it ;Sega did so many things wrong is amazing they didn't end disappearing.