They should have held off on the CD upgrade and combined it with the SuperGrafx
They should have stick with the suitcase model, and offer a bloody trade in.
One year it would be ( give in a PC-Engine any model and get a brand new engine,
for half the price, directly from NEC ). Two years later after holding the fort down against the SNES ( trade in that IFU for an advance IOU, for only half price ). After holding the fort down for the next time, around they would once again ( trade in that
CD-ROM for a brand new DVD-Rom, watch VCD, Karokoe, photo-cd and DVD as well ).
They could have repeated this process for a very long time. They could have even intergrate Bee-cards ( some how ).
That was the mistake. They made the ideal game system model. More importantly they made it "too expensive?", and they let the Americans Yankee-doodled the US campaign. Then they copied the Americans? They over estimated the fan-base?