There are multiple reasons for the Dreamcast's failure. Because Saturn flopped in the face of the PlayStation, Sega released Dreamcast earlier than it perhaps would have done; in 1998, PlayStation and N64 were still current systems and were getting amazing games. Dreamcast was technically superior to both, but couldn't boast its own Metal Gear Solid, Gran Turismo or Zelda: Ocarina of Time, and therefore struggled to tempt away enough Sony and Nintendo fans.
In addition to this, Sega was in dire financial trouble and needed Dreamcast to be a runaway success from day one. In Japan, sales began to dry up, and while the North American launch was successful, it ultimately wasn't enough; many people were happy to stick with their PlayStation and wait for the PlayStation 2 to arrive.