Might be possible that they were using dreamcast controllers during initial development:

Previously, Sega had developed a version of Windows CE for its Dreamcast console to be used by game developers.

https://en.wikipedia.org/wiki/Xbox_(console)#Creation_and_development

Gates was in talks with Sega’s late chairman Isao Okawa about the possibility of Xbox compatibility with Dreamcast games, but negotiations fell apart over whether the Dreamcast’s SegaNet online service should be implemented.

https://en.wikipedia.org/wiki/Xbox_(console)#Initial_announcement_and_content_acquisitions

https://web.archive.org/web/20170825063139/http://kotaku.com/5447897/how-xbox-could-have-helped-the-dreamcast-survive