I was browsing Sega's old website using the Wayback Machine, and found some interesting articles describing the Sega Dreamcast in its development stages. The first one is from Jan. 09, 1998 and titled, "SEGA CONFIRMS NEW CONSOLE IN THE WORKS":

Sega® of America, Inc. confirmed today that it is developing a new powerful video game console to be released in North America in 1999. The company will support its mature products in 1998 while it prepares to take the lead in the home console business in 1999 with a platform that will deliver gaming experiences never before possible.

Bernie Stolar, CEO of Sega of America, refered to Sega's new platform as a "super" console emphasizing its advanced technical capabilities, the business opportunities it will offer third party publishers and the revolutionary game play consumers will experience.

Stolar confirmed that Sega has already begun briefing third party software developers on the new platform and is working with retailers to ensure a smooth transition to the next console.

In 1998 Sega will support the Sega Saturn® in North America with acclaimed arcade and popular character-based games from the company's in-house software development team -- the largest of any video game company worldwide. The Sega Saturn game library reached 300 titles at the beginning of 1998.

Sega is committed to the U.S. market today and for the long term. Sega will deliver revolutionary online gaming through HEAT.Net from SegaSoft and is gaining market share in the PC games category due to strong sales of its character and arcade-action titles published by Sega Entertainment, Inc. Sega GameWorks®, in partnership with Dreamworks SKG and Universal Studios, Inc., is currently operating five high-tech interactive entertainment destinations in the U.S.

At this time, Sega is not releasing any further details about its next platform.
The next article is from May 21, where Sega unveiled the Dreamcast system at that year's E3:

SEGA UNVEILS SUPER CONSOLE;
"DREAMCAST" SENDS WAKE-UP CALL TO VIDEO GAME INDUSTRY
Sega Partners With Microsoft, Hitachi, NEC, Videologic, Yamaha, on Powerful New Console

REDWOOD CITY, Calif. -- May 21, 1998 --
Sega® of America's parent company, Sega Enterprises, Ltd., today revealed its new ultimate video game machine with the power to outperform all in-home gaming platforms and most arcade systems. That power, driven by Sega's revolutionary system design, will deliver gaming experiences previously impossible on any home entertainment platform. The super console, christened today as DreamcastTM in Japan, launches November 20, 1998, in Japan and in the fall of 1999 in North America.

Dreamcast can also describe Sega's platform partners - all global leaders in business and technology. Sega worked closely with Microsoft, Hitachi, NEC and Videologic, and Yamaha to customize each partner's Dreamcast contribution for unmatched 3D gaming performance.

With 128-bit performance from a reduced instruction set computing (RISC) central processor, an independent 3D graphics engine and a dedicated 3D sound chip, Dreamcast achieves a level of total system performance unrivaled by any consumer entertainment product. Dreamcast is also the first video game console to offer standard networking features for multiplayer gaming, bringing the best features of console, PC and online gaming together on one system.

"Dreamcast is Sega's bridge to worldwide market leadership for the 21st century," said Bernard Stolar, president and chief operating officer, Sega of America. "The Sega you see today is driven by two important goals: delivering the best new gaming experiences this industry has ever seen, and winning back the No. 1 position in the console category. We'll do whatever it takes to get there."

Dreamcast was designed to appeal to the hard core gamer, as well as the casual gamer and people who have never enjoyed interactive entertainment. Polygon counts topping three million per second leave players staring at the whites of their opponent's blood-shot eyes. A dedicated real-time 3D sound processor surrounds players with 64 channels of music, voices and gameplay sound effects at a quality rivaling professional audio equipment. Dreamcast's online capabilities will unite Sega fans around the globe with a range of intense action gaming that only a video game console can offer.

Dreamcast can display revolutionary new types of realistic and engrossing 3D graphics. Human movements, fog, water effects, light and shading appear ultra-realistic. With this level of graphic performance, effects such as the passage of time from day to night can be portrayed in real-time.

Another revolutionary feature of Dreamcast is the Visual Memory System (VMS), which is a memory card and the world's smallest portable game card with built-in LCD screen. Plugged into the Dreamcast controller, the LCD screen lets players set up secret moves against their opponents, such as killer plays in sports games, for which the defensive player will not be able to plan, thus adding an even more realistic feel to the game. Pull out the VMS card and it becomes a portable electronic game card no bigger than a business card. In addition, users will be able to save game features, such as user-created special players or teams, and share them with friends simply by linking two VMS cards together.

In designing Dreamcast, Sega accomplished its two key design goals: 1) a seamless integration of high-performance components, each optimized for a specific game processing and display task, and 2) a scaleable system architecture to take advantage of future technical enhancements and new gaming concepts hidden in the minds of the industry's most creative game developers.

Sega's Partners

Microsoft
Microsoft will provide a customized version of its Windows CE operating system with DirectX services that has been optimized for console-style gaming. Windows CE provides Dreamcast developers a flexible, versatile development environment supported by Microsoft Visual C++ 5.0 that makes title development more efficient. Windows CE with DirectX has been hand-tuned to be small and fast to provide superior performance specifically targeted at the Sega Dreamcast hardware architecture, giving developers the confidence that software developed for Dreamcast will take full advantage of every hardware capability in the system.

Hitachi
The central processor in Dreamcast is the video game-customized Hitachi SH4 reduced instruction set chip (RISC). Sega and Hitachi retooled the chip to enhance its floating point operations capabilities - the key ingredient for high-output 3D gaming applications. The Dreamcast processor can perform floating point operations four times faster than the Pentium II chip.

NEC
The muscle behind Dreamcast's high-end graphics engine is a custom-designed version of the PowerVR Second-generation technology developed jointly by NEC and Videologic. With a peak performance of over 3 million polygons per second and customized anti-aliasing technology, the PowerVR Second-generation technology chip in Dreamcast outperforms all other graphics chips today or proposed for use in upcoming PCs. NEC has a proven track record in the chip industry and is a global leader with expertise in chip design and fabrication.

Yamaha
Yamaha is contributing a dedicated, real-time 3D audio chip with more power than some next generation consoles offer in total. Sega also worked with Yamaha to develop a high-speed CD-ROM drive for the platform, which speeds up access time and allows for much bigger games and larger playing fields.

Sega of America is the arm of Tokyo, Japan-based Sega Enterprises, Ltd. responsible for the development, marketing and distribution of Sega videogame systems and videogames in the Americas. Sega Enterprises, Ltd. is a nearly $3.0 billion company recognized as the industry leader in interactive digital entertainment media, and is the only company that offers interactive entertainment experiences both inside and outside the home. Sega of America's World Wide Web site is located at (SEGA).
There was another series of pages titled "Sega @ E3!" with pictures showing prototype Dreamcast images and other information:


Dreamcast is the new ultimate video game machine with the power to outperform all in-home gaming platforms and most arcade systems. With 128-bit performance from a reduced instruction set computing (RISC) central processor, an independent 3D graphics engine and a dedicated 3D sound chip, Dreamcast achieves a level of total system performance unrivaled by any consumer entertainment product.


Dreamcast will feature a Visual Memory System or VMS. VMS is a memory card with a built-in LCD screen. It plugs into the control pad to add a whole new level of strategy to game play. Gamers can use the LCD to set up plays in sports games or plan secret attacks in RPGs without their opponent's knowledge. VMS is a great community builder for Dreamcast gamers. Players can save special characters, moves or teams to the VMS, and trade game information by connecting two VMS cards. VMS is also a portable game device the size of a business card, complete with a directional pad, control buttons and an LCD game screen.
All 3 links to these articles will be provided here:

Sega Confirms New Console in the Works: Sega Online: Central (Press Releases: January 9, 1998)

Sega Unveils Super Console - Dreamcast Announcement: Sega Online: Central (press releases)

E3 Photos: Sega @ E3!