Traditionally, game companies make their profits off of game sales right? Sell their console for a measurable loss, but get people to buy lots of games and they'll eventually profit.

Sega, right now, just dropped the 'money losing' console altogether, and went straight to the 'profit from the games' angle. Sega is/was one of the larger companies who could afford to make consoles years ago, but the PS2 disaster has changed the situation. Instead of making bad Sonic games on a system not-a-lot-of-people have/will buy, just make bad Sonic games for every system with a spark.

Perhaps they will earn enough to come back one day, but as it stands now the competition is incredibly fierce. Sony and especially Microsoft are huge companies. If their systems lose tons of money, they have additional resources to reinforce it. If Nintendo went for an expensive system this time around and it failed miserably, they would be in pretty dire straits too--though they have the Gameboy legacy and now the DS to fall back on. Sega has no such cushion.

I think I'd rather see them continue to support other consoles, instead of them trying to come back with another one. I would seriously have a hard time convincing myself to get a new Sega console when I already have 4 others, even if it were the only way I could play Shenmue 3 and Virtua Fighter 6. The market is full.