From what I remember, the PC-Engine was quite successful, in Japan. It was the
American version, the TurboGrafx-16 that wasn't so successful. In Japan, the PC-Engine beat the MegaDrive during their years. In fact, the PC-Engine was second only to the Super Famicom. What kept NEC from being successful long term was the lack of strength overseas (in the U.S. and Europe) - Even the PCE CD attachments, the CD-ROM2 and Super CD-ROM2, had quite a following in Japan. (the Arcade Card ver CD-ROM games weren't too big though)
The TG16 CD-ROM bombed in the U.S. and TG16 only had a cult following a few years after its 1989 introduction (PCE was out in 1987 in Japan!) and it had NO market presence in Europe at all, AFAIK. Though in the U.S., owning a Turbo Express (PCE GT in Japan) was concidered pretty cool, even though it didnt sell enough to even start to compete with the Gameboy.
The PCE was really an entire line of different machines and addons/ upgrades.
The one PCE system that REALLY, REALLY did not do well in Japan was the PC Engine SuperGrafx.
Once known as the PC-Engine 2 - most just call it the SuperGrafx or SG for short. unlike all the other versions, addons and enhancments of the base PCE, the SG was actually an upgraded, more powerful machine, with double the sprites (128), 2 background playfields, twice the VRAM and I think more main RAM, as well as a larger color pallete and possibly more colors on screen, all over and above the regular PCE (or CoreGrafx, CGII, Shuttle and CD-ROMs) The SG only had 5 native games released for it (Strider, Galaxy ForceII, Forgotten Worlds and a few others never made it) the SG came out in 1989, two years after the original PCE, it had one game the year it was released, Battle Ace, a cross between AfterBurner and Galaxy Force. Then in 1990 the SG got Grandzort (or Granzort) the sequel to Keith Courage in Alpha Zones. SG's third release was its best, Ghouls N Ghosts--a graphically awesome, but aurally poor version of the game that had just skyrocketed every gamers opinion of the MD/Genesis into the stratosphere. I say the SG was aurally poor because its sound chip was the same lame one used in the PCE/TG16. Though some say SG games feature better music & sound than PCE games, that's probably because SG game cards could have higher "meg" counts. Next for SG came Aldynes, an original shooter (non-arcade) that was never made in any other form on any other machine. Last, came a decent conversion of Capcom's WWII shooter, 1941 Counter Attack, and that was it for the SG. by 1992 it was deader than the Atari 5200 or the Sega Saturn was that soon after their releases, but the SG did become a collectors item. The Japanese were perfectly satisfied with their original hyper 8-bit system, the PCE.
To say the basic PCE wasn't a success is simply not the case