The CPU's were a bottleneck in R&D is the point. Because of the limitations of the CPU, a superior GPU was not a consideration in R&D. I'm sure most current gen games on consoles aren't running poorly because of the CPU's (maybe Watch Dogs and Assasin's Creed Unity are two particular examples) but 1080p resolutions haven't been met in many games either because of limited GPU performance. Furthermore, certain developers had expectations for the GPUs so that they can implement higher levels of detail, and we've seen with The Witcher 3, Watch Dogs, and in other titles there have been downgrades. 

Very good point.

A lot of younger console gamers need to realize that engineering choices are often dictated by budgets and financial viability. Who wouldn't want a PS4/XB1 console powered by a Core i5 and a GTX780Ti? But is that financially viable and realistic? No. I would much prefer for Sony, Nintendo and Xbox divisions to survive rather than create a very powerful console that they are forced to sell at a loss or alternatively raise the price to $600+ levels which alienates a lot of gamers.

1) Investors of Microsoft have been constantly pressuring the firm to sell of the Xbox division because the original Xbox was essentially a losing project to establish the brand name. MS lost around $4 billion dollars after the original Xbox generation because it was basically just learning the console business and establishing the Xbox brand.

http://www.engadget.com/2005/09/26/forbes-xbox-lost-microsoft-4-billion-and-counting/

Overall, in the last 10 years, even if we add the profits of Xbox 360 generation, MS's Gaming Division in total lost $3 billion! As you can imagine, most businesses would not want to continue selling products or services that are money losing revenue streams. Xbox 1 desperately needs to change this situation or investors will continue to pressure MS to exit the console business.

Source: January 7, 2013 

http://www.neowin.net/news/report-microsofts-xbox-division-has-lost-nearly-3-billion-in-10-years

2) Sony was not in a position to lose more $ as the firm litearlly lost 10X its market capitalization (i.e., became worth 1/10th its 2000-era levels). 

Why does all of this financial mumbo jumbo matter? Because the guys running these companies need to think long-term. Sure, anyone can win 1 generation over the 4-5 years period but if it costs you $4 billion to "win" it, did you really win? Only in the eyes of consumers really.

3) If we look at the manufacturing costs of Xbox 1 and PS4, it looks like both of the firms squeezed the hardware chosen to fit the budgets close to the max:

Research firm IHS reveals combined cost of parts and manufacturing for Microsoft's console to be $471, compared to $381 for PlayStation 4.

http://www.gamespot.com/articles/teardown-reveals-xbox-one-costs-90-more-than-ps4-to-make/1100-6416404/

-----

Overall,  MS could have ditched Kinect and invested the extra $90 to improve the Xbox 1 GPU (i.e., GDDR5 and a more powerful GCN GPU). However, I think more or less both console manufacturers did a very good job of finding a good balance bewteen CPU+GPU+RAM amounts for this generation. The only way it was possible to make the consoles more powerful is either through higher prices to the consumers or by taking big losses on each console sold or a combination of both of these factors. I don't think any of these are preferable for the console makers or us gamers to be honest. 

------

After tying how the financial aspects tied directly into the engineering choices for the consoles, we should also look at if it even makes sense to make a console future-proof beyond a reasonable level.

Right now I still don't think we have seen most of the power squeezed from current consoles as 1st party developers should improve graphics over the next 2-3 years because developers are still adopting to making console games for x86 and using DirectCompute / Asynchronous Compute shaders of GCN. At the same time, by having the consoles not overpowered like Xbox 360/PS3 generation, it means we will likely get PS5/XB2 sooner and honestly speaking, imho, it's better to have shorter console generations than 7-8 years because no matter how much powerful you will make a 2013 console, by 2019, GPU hardware is 6-8X faster.

Take a look --> Already today a Titan X is 3X faster than the GPU inside PS4. 

PS4 is roughly equivalent to AMD's R7 265, and today's flagship GPU from NV is basically 3X as fast. Soon AMD will release R9 300 series that is rumoured to have 4096 shaders which will likely also triple the performance of the PS4's GPU.

http://www.computerbase.de/2015-03/nvidia-geforce-gtx-titan-x-im-test/4/#diagramm-rating-1920-1080-4xaa-16xaf

This isn't about PCs vs. consoles but understanding the progress of technology and how it will tie into future PS5/XB2 consoles. At the current pace, GPUs roughly double in performance every 2.5-3 years. That means 2018, we'll have a GPU 6X faster than PS4 and by 2021, 12X faster.

But, sometimes there are revolutionary jumps in CPU, RAM/VRAM, GPU architectures that push the industry industry. For example, by 2016, the introduction of High Bandwidth Memory 2 (HBM2) will mean that future GPUs will have 800GB/sec-1TB/sec memory bandwidth. 

http://www.kitguru.net/components/graphic-cards/anton-shilov/ceo-of-nvidia-cant-wait-to-tell-you-about-future-pascal-products-in-the-pipeline/

Why does all of this technical mumbo jumbo matter? It's because back when PS4 was designed, it probably cost $200-300 extra to just put in a 40-50% faster GPU in 2013. Remember you need more expensive cooling, larger chassis, and a more powerful/larger PSU. But, even that 40-50% faster is really a drop in the bucket as far as "future-proofing" goes when we look at how fast GPU speed increased. It's actually telling that MS and Sony did understand this because it means they actually thought about the design and console generations this type vs. the money losing PS3/360 generation that didn't work out so great financially.

I do believe that it's much better to just release NEW consoles 5-7X faster by 2018-2019 at $400-450 and simply start the cycle again than to overengineer a $600-650 console for 7-8 years. 

PS3/360 were still able to "last the generation" though, even with their small RAM, because the games were tailored to work within their memory limitations. The same will be true of this gen; if PS4 and Xbone had launched with 4GB, the games would have been made to accomodate that as the baseline.