Yeah, Sega completely messed up marketing with the SMS in North America by giving Tonka exclusive rights to market it. That was their first fumble with the console. Sega Japan was never really behind the US offices either, of course back in the day us gamers had no idea about that stuff, we just saw what we did in stores and on television - neither of which featured SMS stuff.
SMS was in one store in the small town I grew up in Northern California, Radio Shack. They only ever had one console on hand and maybe five games. Staff had no clue about it and were not interested in letting kids even look at the back of the boxes so it was hard to get excited about it.
I had one friend that had one but he never would hook it up because he didn't like it and he refused to unhook his NES because he heard a rumor that plugging in different consoles one after the other like that could mess up the NES. He was not chancing that, even if it was an obvious stupid rumor.
Sega had a history of dropping the previous gen and I think that hurt them. Nintendo was still supporting the NES into December 1994. I think that really hurt them with fans. They had the Master Converter and much better distribution with the Genesis. They should have released some of those SMS games as double hits or something for the Converter as a cheap option. It would have helped move some unsold units too. Sega was kicking butt with the Genesis and adding more emphasis on that backwards compatibility would have helped set them up better against the coming Super Nintendo, which did not have backwards compatibility.
Wow, what a story! I know RadioShack because of how famous it became, even appearing in Sheldon Cooper's adventures.
Those rumors! Imagine if that had happened! It would have been a disaster if you'd never been able to try or play other consoles. But of course, back then it was better to be safe than sorry and take care of the top-of-the-line consoles.
I still have my SNES and NES, and they work, but I keep them as collector's items now.