One is that a max of 128 sprites, and with no sprite scaling/rotation effects, is a terrible bottleneck indeed. The PC-FX has the CPU, the RAM and the colors to do some sweet 2D stuff, but without the sprite capacity, it's in a bad position.
I'm getting curious enough to think about actually programming something on the PC-FX to see how bad the limits are.
128 32x32 sprites completely fills the screen ... twice. That seems like a fairly good starting point.
No rotation/scaling is definitely a good point ... IMHO, I'd personally prefer to see a hand-drawn frame of a sprite turning than the mess that the 5th-gen hardware makes of the job. But I guess that consumers did reasonably expect that any 5th-gen console should be able to do it.
You do have the rotating/scaling KING background for the obligatory huge boss monster.
I expect that they thought those capabilities would be enough as a starting point until they released the 3D expansion which would have added (according to the Japanese guys that tested the PC-FX GA), up to another 500 sprite capability.
Another is that the sound processor is a joke. PCE fans in 2015 might love the retro sound, but in 1994 it must have been a baffling choice.
Yes, it was pretty lame by that time as a music synthesizer ... but from my memory, everyone was expecting CD soundtracks at the time, and it can certainly do that. So the sound processor would be just sitting there doing sound effects. If you limit the CD's ADPCM to mono, you've even got another ADPCM channel for digitized sound effects.
So, definitely not as capable as something like the Saturn's dedicated 68000 sound processor, but you should be able to get some reasonably decent results out of the system.
The final thing is the price. Costing as much as the clearly more powerful Saturn and Playstation is an obvious problem. If NEC and Hudson had tried to undercut the competition right from the start, other design choices might have been more understandable.
I totally agree with this ... as much as I can attempt to gloss over the issues ... the PC-FX is clearly a less powerful system than it's competition, and was a bad deal at the same price as them.
But ... you just can't market a system as "Yes, it's crap ... but look how cheap it is!!!!". So they hung their campaign on it's one out-of-the-box better-than-the-competition feature ... video playback.
While I personally can't stand fighting games, I've got to say that Battle Heat does at least look good as a release title at that time. AFAIK, no other console had anything quite like it.
But the video playback was a one-trick-pony, and it's limitations were very apparent. So they never had enough sales (which developers look at to calculate ROI) to justify bringing out the 3D expansion.
And so the whole thing collapsed and NEC got out of the video game business. Not too different to Sega a generation later, really.
Which brings me rambling around to the PC-FX vs the Saturn. If you look at early expectations, then the Saturn was not going to be a particularly great machine. The slow NEC V60 CPU, the basic VDP2 hardware, a sprite chip, and no VDP1 pretending-to-do-3D. The PC-FX would have offered reasonable competition to that machine.
It was only late in the game when Sony came out-of-the-blue with the PlayStation, and Sega realized that they were going to get slaughtered, that they started slapping on whatever they could come up with in order to be competitive. Thus leading to the overly-complex monstrosity that is the released version of the Saturn.
NEC just didn't have the video-game-hardware resources to fall back on to make similar last-minute changes ... and weren't willing to take the loss-leader approach of including the 3D-chip as standard.
However, even the Duo-RX was 30,000 yen in late 1994. From what I understand, NEC had to make a profit from the sales of the consoles themselves. That's probably something they would have had to resign themselves to changing if they really wanted to succeed.
The Duo-RX price should definitely have been cheaper by then ... their production costs in 1994 should have been pretty low on that system. I'd bet that they were just being greedy and perhaps attempting to defray the R&D costs of the PC-FX.
While the common wisdom is that console manufacturers lose money on the consoles (particularly in the first few years), and then make it up on licensing fees ... that's not always the case. For instance, I was told by someone at Nintendo that they have never lost money on a console sale.
The same certainly can't be said of Sega when it comes to the first version of the Saturn ... they must have cost a fortune to manufacture!