It all relates back to the Sony-Sega tie-up. Kalinske (and others) wanted Sega to become a privileged 3rd party to Sony, just as Namco eventually would, because hardware was too expensive to develop.
Although it's never been discussed here before, the Japanese Sega executives did have a series of meetings with Sony about this, but after long consideration the deal did not go through. Basically, Nakayama would not do it because he wanted to remain in the hardware game.
Even before that, though, there was internal pressure to drop out of the home hardware market:
https://www.ign.com/articles/2009/04...f-sega?page=10
All of the evidence made it clear that Sega should have gone 3rd party: other established arcade giants like Konami, Capcom, and Namco were enjoying huge success, and the costs of hardware development and manufacture were very clearly skyrocketing. Sega did not have enough money in the bank to continue.
Nevertheless, Nakayama made the decision to stay in the hardware business. Ultimately, that was clearly a "bad decision," yet without it then all of the Sega nerds in the world would never have gotten their Saturns and Dreamcasts.
So it's just silly when people call Nakayama a shithead who ruined Sega. We wouldn't be here posting about this stuff if not for his "bad decisions."