I've stated several times that the PS360 were too powerful back in 2005/2006, but before I replied to this topic, I wanted to review the facts. And after reviewing them...
I'm more convinced than ever!
First, let's review the 6th generation before adressing the 7th. The 6th generation consoles were released from late 1998 to early 2002 for launch prices of $200 to $300. They had 26 to 64 MB of RAM, about 10 times as much as the 1994 to 1996 consoles of over half a decade earlier. Of those earlier consoles, the only ones that didn't flop launched at $300 and below, so accounting for inflation, prices fell a bit going into Gen 6.
The 360, with its half a gig of RAM, came out a mere four years after the original Xbox. That was a full generational jump, yes, but done very quickly and early on. The PS3 jump was even greater, with RAM (an easy number to use in these situations) increasing by about 13-fold. This was a bigger jump than the PS1 to PS2 jump, and does not account for the high cost of Blue Ray.
So the PS3 and 360 were ahead of their time. But was this a bad thing?
Well, yes.
The PS2's best years were from 2001 to 2003, the 6th gen's equivalent of 2007 through 2009, with 2004 through 2007 being years of slow decline. If those years sound familiar, it's because that's when the 7th gen's leader, the Wii, was at its best. The GameCube did its best from launch through 2003, and the Xbox from 2002 through 2004. In other words, consoles began selling around their peak within the first year or two. This is a good thing! It means that systems begin paying for themselves and establishing an installbase quickly, allowing for companies to focus on software and the next gen later on.
The PS3 and, in contrast, had its peak from 2010 to 2012, while the 360 had its peak from 2009 to 2011. That meant that it took these consoles almost four years to pick up steam, meaning that their manufacturers suffered losses for a long time before they got their money back.
Furthermore, these late peaks also delayed the 8th generation. Usually, companies release consoles every 5 or 6 years. However, the late peaks meant that Sony and Microsoft honestly had no choice but to delay their next systems, simply because they hadn't gotten their money's worth from their PS360's. Therefore, while the 8th gen should have begun from 2010 to 2012, with the Wii U being one of the last systems to fall into place, it is actually beginning in 2013. Not only did this mean that developers were ironically stuck with weak hardware for longer, it also meant that Nintendo, coming off of a sucessful generation, had the initiative to become the default leader of the next gen (The Wii U's current problems have less to do with Microsoft and Sony's great decisions and more to do with 3rd party hatred of Nintendo and Nintendo's own incompetence).
In short, the PS3 and 360 being so powerful hurt their respective companies, made the gen go on for a long time, and ironically handicapped developers later on by forcing them to work with 2005 hardware.
So, what would I have recommended these companies do back before the start of the 7th gen? Simple: build a machine for a price point. Accounting for inflation, people would probably have been willing to spend up to $250 or so on a game console, even one with multimedia capabilities, in the mid noughties. Sony and Microsoft should have built their designs around that. Microsoft actually did that partially right by having the $300 "Core" model. Sony, however, messed even that up. They should have either have built a less powerful machine like the PS2 was compared to the original Xbox, forgone Blue Ray and cut $200 from manufacturing costs, or simply have waited another year before releasing the PS3. True, that would have given Microsoft a 2 year advantage, but if Sega's various consoles have taught us anything, its that entering the market early does not guarantee victory. Besides, the PS2 had enough life in it for another year, especially with its final price cut.
Then, after five or six years, somewhere in the 2010 to 2012 range, Microsoft and Sony could have released the 8th generation of consoles, at a reasonable price of $400 or so, while never having machines as weak as Nintendo's.
tl;dr Sony and Microsoft whould have built weaker consoles and have released the XBone and PS4 from 2010 to 2012.
And if you think I'm crazy, compare the 360's and PS3's sales to the PSOne's and PS2's, and wonder why the former are so low despite market growth and a long gen.
and do u happen to know if 360 has lost or gained money in the long run? Im pretty sure PS3 while selling at a profit for the last few years stil hasnt made up for its initial losses.
