Fall 2010, I think given the number of defective systems it would be in Microsofts best interest to jump to the next generation quickly, by 2012 all the first year 360s will probably be dead.

 Disruptive strategies always pay off. In every generation except one, the winner has been disruptive. The exception is the 16-Bit Generation, which resulted in the destruction of Sega and the crippling of Nintendo. Every other generation was won by the disruptor.

The Atari was disruptive because it was cheap and the first.

The NES was disruptive because it was easy (compared to computers) and fun, and didn't require complex knowledge (like the computers then).

The Play Station was disruptive because it relied on quantity of software and hardware and third-party support, rather than low quantity and high quality. It was also untarnished by the console war.

The Play Station 2 was disruptive because it relied on low price rather than high specs and also on domino effect: the popularity of console boosts sales. Its time of competition only with the Dreamcast gave it all the third parties and ensured a huge quantity of software.

The Wii is disruptive because it is the only system that evolves gaming. The PS3 and 360 can claim improved graphics and processing, but they are not radically different to the PS2's and Xbox's in the same way that the 64-bit N64 was not noticably more powerful than the 32-bit Play Station. There is a huge graphical difference between the PS1 and PS2 compared to the difference between PS2 and PS3. Also, people have now experienced 20 years of the same since the last major shake-up (the NES). They want something new. 

Thanks, your spot on.  And like you said, the main thing I didn't mention is the fact that MS, like Sony, is no longer in console's solely to make, market and sell games.  There are all sorts of peripheral revenue streams like film and television downloads that now go hand-in-hand with 360 ownership, and will be even more prominant in the next console.

The PS2 wasn't disruptive in the slightest.  IT was the successor to easily the most successful console of the 5th generation.

I would argue that from a gaming perspective, the ONLY console you listed that was disruptive was the Wii.  It is the only one that evolved gaming outside of the "lets make graphics better" mantra." 

2013 is really looking like the sweet spot for MS's next console in my opinion. If they release any earlier than that I think it will be even more misplaced in the market than the PS3 was at launch. This gen needs to go on loger than previous generations to help out the software developers. It is really dumb to be killing consoles off from the top quality games right when they start hitting mass appeal.

@starcraft

No, it was just the most disruptive. The NES clearly was disruptive. It focused on everything the Amiga and Commodore did not (high-powered complex single-player games). Similarly, the Wii is not focusing on high-powered complex single-player games (which is what the 360 and PS3 are focusing on).

golf clap for KGB29, for saying one of the things i was aiming for in a shorter presentation.

but remember game revenue itself is where the money is last gen sony owned this time its a relativly split market, no reason to try and change that unless your willing to risk losing market and developers

next Thursday, or 2012.

The longer the Console generation progresses, the less advantages Microsoft has and the greater advantages Sony has. A 5 million console difference at 30 million sales is insignificant. Furthermore, Blu ray can only become more significant as time goes by.  

Releasing in 2009/2010 makes the most sense for microsoft actually. The 360 would still be current enough for Microsoft to sell them to practically anyone. They won't be discontinuing the last model just because the new model is out. Since they make the best development tools, Developers can hit the ground running on the new system. We wouldn't have to wait long for some of the good games to come out. Furthermore Microsoft can take advantage of Epic's new UE4 which will come out about that time as well.

The PS3 is an Unbalanced architecture. Really they needed a better GPU than they put in. A weaker GPU than the Xbox was shameful for them to do. Microsoft can at that time blow the PS3 out of the water technically with a balanced architecture that is more impressive in every way. Im talking about actually achieving 1080p and not just talking about it.

From what I've read the 360 is selling better this year then it did last year. So I hardly think this year will be unkind to it. Just look at its software sales. The 360 is going nowhere.