[quote name='electrictroy']You have a good point, but DVD wasn't that expensive in 1999. No more expensive than a *proprietary, non-standard, expensive* 1 gig CD-drive. That GD-CD probably wasn't cheap.
Plus, by choosing CDs, it also made it easier for pirates to rip & distribute.
A January 2002 Newsweek article I saved, comparing the DC/PS2/Cube/Box to one another. It lists stats, and it shows that DC was the #1 console at that time - 5 million versus the PS2 - 2 million.
You may be right. I don't know Sega's financial condition. I wonder why Nintendo seems able to market Cubes at ~$100 below the competition, and yet still have billions of dollars in cash reserves???
troy[/QUOTE]
The GD-ROM was just a minor variation on CD-ROM that took advantage of manufacturing improvements that had become standard since the first audio drive standard was created almost twenty years earlier. Those improvements made it possible to packa the tracks much closer together but be readable with an off the shelf CD-ROM mechanism. The secret sauce was in custom coding of the controller chip, which was an otherwise standard item.
http://mozcom.com/~sknkwrks/gdcontroller.html
Magnetic versions of this sort of trick had been applied in floppy drive for a long time before this was done by Sega. (I've never heard whether it was conceived inhouse or presented to them by an outside vendor.) This delivered a lot of extra capacity and hoped for piracy protection at almost no added cost.
The article you reference has some flaws. It treats the PS1 as no longer being a factor even though it was still moving a lot of new software and still growing both as the PSone and via the backward compatibility of the PS2. At the same time most retailers had eliminated nearly all software from earlier Sega platforms from their inventory. FFVII was still generating manufacturing royalties for Sony while Sega's third party library from earlier machines was no longer in the picture.
Nintendo has had a few thin quarters here and there when they were using up a lot of capital to bring new products to market, especially new platforms. But they always had a respectable cashflow situation from at least one source. For instance, during the transition from N64 to Gamecube they had the portable market effectively to themselves with Pokemon as a license to print money. Years earlier, the NES was still enjoying healthy software sales when the SNES launched.
By comparison, after many months with no active platform, Sega launched Dreamcast after many quarters of red ink and deeply in debt. Looking back, although they enjoyed strong loyalty from their fan base, Sega's period of healthy finances in the console business was short lived. They had a few years during the 16-bit era and that was pretty much it. Everything before and after was mostly struggle and some brief periods of near success.