The Sega SG-1000 Mark III was the next game console in the SG-1000 series after SG-1000 Mark I and SG-1000 Mark II (an updated Mark I). It was released in Japan in 1984 to compete with the Nintendo Famicom and designed similar to the Mark II. The parts inside are similar to the MSX computer and SG-1000 but have been improved. The system would take its own cartridges as well as Sega Cards and SG-1000 carts. The Sega Cards are the same ones that are compatible with the SG-1000 card catcher add-on, but the card catcher is now built-in to the Mark III console.
The system was redesigned and renamed the Sega Master System when released in the US in June 1986, a year after the Nintendo Entertainment System, and sold for US$200. The Master System was released in other places soon after including Japan again (in November 1987), but in its new form. The system failed to make the impact in America that Sega had hoped for, mostly due to support for the dominant NES with its exclusive third-party developers. The Sega Master System sold 125 000 units in its first four months, but in the same time, Nintendo sold 2 million NES consoles.
Nintendo had 90% of the market in America, and it would have taken a big effort to win over them, so Sega CEO Hayou Nakayama decided he did not want to waste too much effort trying to market a console in a market already largely dominated by a larger company, so in 1988 Sega handed over the marketing of the console to Tonka Toys. But this was not a good move and made matters worse. Tonka had never marketed a console before and basically had no idea what to do. The Sega Master System went nowhere during this period.
In 1990, after the Sega Genesis had been established and was selling well, Sega got the marketing rights to the Master System back from Tonka. They released a new designed console with new packaging and called it the Sega Master System II. This new version was made smaller and to reduce costs it included no reset button, power light, card slot or expansion port. Sega did everything that Tonka didn't to try and market this version, but didn't get much from it. At least at this time, the Genesis was doing well for them. The Master System was supported for a few years more in the US.
In Europe, there is a different story about the Sega Master System. It was marketed in many countries, including some where Nintendo had not yet ventured to. There was lots of third party support for the system in Europe and it outdid the NES. In effect, Nintendo had to license some popular Master System titles to the NES to try and make some sales. The console was supported by Sega in Europe up until 1996 when it was discontinued so that Sega could concentrate on the Saturn.
In Australia, the Master System did not do as well as the NES but still did not suffer as much as it did in America. Another success story for the Master System comes from Brazil, where the console was marketed by Tec Toy. They released a Sega Master System III and other variations. They also translated some games and changed characters to be more appealing to Brazilian audiences. They even ported some Game Gear games to Master System cartridges and made some new Master System games. It is perhaps because of the game and console production that was more close to home for the Brazilians that the Master System did so well. The console was supported until 1997.
The Master System had some success in the world, but was a major failure in the US. Sega would have learnt more about marketing a console and that's why their next console, the Genesis, was their most successful console. But it is because of the Master System that Sega was able to get into the worldwide market and make the Genesis a success.