Hardware is meaningless sometimes...look at the 3DO. It technically outclassed ALL of it's 16-bit rivals in 1993 but the software support for the system was a joke. Besides the excellent Amiga ports, 80% of the software was low budget junk. The Neo Geo is another example, despite SNK's 24-bit claims (it really is a supped up 16-bit system) the system still was technically far superior to both Nintendo and Sega's machines at the time. Yet it's extreme price point, expensive software and scant releases kept it from ever being anything more than something for those who could afford it. It was supported for a long long time and had a following but probably no more than 10% of the entire market share, if even that. I guess in many ways it really never was competing at all.
Hell, look at Sega and Nintendo's later consoles. Neither the Saturn nor the N64 reached the hardware or software sales the Genesis and SNES did.
Proof that hardware isn't always where it's at, software is far more important. Good marketing helps too.