The Jaguar's going with carts is weird though, because they would have already seen various devices were bringing in CDs, and if Atari wanted the Jaguar to maintain for a typical length console gen of those days (~ 5 years), they would've at least had to of considered CDs at some point.
They did, they planned for the console to take cartridges because what they were going to use would have made the console cheaper and the games to produce cheaper than a CD, although it would turn out they had less money than they let people in on. But they were also aware that all the competitors were using CD, CD players were becoming popular home and portable, and PC drives were selling gangbusters, so they
intended to launch the Jaguar CD at the same time as the Jaguar console but issues prevented that from happening, and instead the Jag CD, cheaply made, was released late in 1995 when it was obvious Atari never had the resources to pull the jaguar off. There's marketing and press releases talking about Atari promoting the Jag CD and Jaguar as early as 1993.
But if cartridges were so pricey for Atari to do even with the benefits of a cheap slot, then maybe they should've eaten the costs and gone with CD at the start. They based their CD tech on the cheaper Audio CD standard anyway, but that may've made the reliability problem even worst.
Maybe floppies or cassette would've been a viable alternative in addition to carts for them?
Atari didn't have money to produce CDs either, yeah they would be able to produce more for the same price but it would only be 50,000 Cartridges to 100,000 CDs most likely. By the time they had their complete launch in 1994 every other department At Atari was laid off and closed, so if the company was relying on only one product to stay afloat, those aren't the numbers that were going to save it.
Floppies and Cassette? On a 3D home gaming consoles in 1993? Lol, the first problem with that idea is that in the US, the biggest market, Tape was a repellent, same in Japan for the most part, so that would disqualify Atari from the 2 largest gaming markets at the time. Even in Japan Nintendo used Disks for the Disk System and not tape.
Floppies may seem like a better option until you consider the biggest shortcoming it would have given Ataris financial position, that being an increase in piracy which wasn't an option. Another big problem with Disks is data access, loading times would be early CD gaming level or worse unless Atari build a faster system that also included
more ram which was also off the table. Disks also aren't as reliable as carts, easy to make unplayable, and wouldn't have the same longevity. Load times and piracy alone would make the idea of Floppies make Sam have security throw you out into the street.
That's why home consoles didn't have much onboard memory, because they didn't need it with cartridges.
But the other thing that those carts allowed Nintendo to do was have very high licensing costs, compared to Sega and SNK, who I think still had higher rates than what Sony eventually offered. And it really just came right back down to the media format; by N64 time most 3P devs had enough of dealing with cartridges, but that's the only real option of a format the N64 offered them.
Nintendo wasn't thinking of the consumer or developers then, Japans computer industry had moved to CD's by the time of the original Ultra 64 announcement with a small remnant using Disks for business reasons, and there wasn't much of a reason for a Japanese developer to consider cartridge over either other than portable electronics, and CDs allowed for cheaper software. Nintendo made money on the N64 using their old strategy it cost them market share and created consequences for the Gamecube later.
