Although I agree that any of the console manufacturers could attept to produce a graphical powerhouse console, I still don't think they would take a similar approach to how the XBox 360 or PS3 was produceed.

I'm certain people will disagree with me, but I don't think there has ever been a console which was as powerful and as inexpensive as the Gamecube was at launch. Nintendo was so successful with the design of the Gamecube (essentially) because they took outdated hardware and modified it to match their needs ...

I really wouldn't be that surprised to see console manufacturers taking a GPU like the HD4870, increasing the number of stream processors (from 800 to somewhere between 1200 and 2400) and overclocking it (to a clock speed 1.5 to 3 times its current clock) ... If they are able to take advantage of a 28nm or 22nm process this GPU should be fairly small and inexpensive even with the modifications, shouldn't run too hot even though it is overclocked, and should be at about the peek of the performance per dollar curve.

@Slimebeast

 unfortunately I just have theories, but no clue what will happen here.

What I do know is that it has been made public Intel is heavily courting MS on using their next generation of chip for the next Xbox.  And you bet that IBM will try to keep its big fish with new technology as well.   ATI had done so well for the 360 that I would not be surprised if MS is also in early talk with AMD (now includes ATI) on technology trend they maybe able to use.   If all these companies are proposing technology to MS, you bet cutting edge options along with value choices would be made available for MS choosing.  

What about Sony?  I am sure they have a team researching technology for the next generation now too.  They are probably chatting with potential partner as well.   But right now I don't think either Sony or MS have a solid idea of what they want in the new boxes yet.   

The only thing I agree with in this post is that Nintendo will continue to make money.

Every console will have motion controlls next generation.  Every handheld too.  Heck, iPod and DS already have it - although it wasn't built into the DS.

MS and Sony may cater to the hardcore market but more niche and many of the hardcore games are actually on DS.

Sony and MS are at least as interested in making money as Nintendo is.  This artistic crap you mention is so silly, it is hard to even laugh at.

Another option is that your post was a joke - which I just fell for :(

Oh.  With "chip", do they mean an Intel CPU or Intel's GPU project?

I expect 6D!

They are offering both cpu and gpu and maybe the whole chipset as well.  And why not, intel can do all that.  Rumor has it that Intel is trying to cut a deal so tempting it will be very difficult for MS to pass up.  Keep in mind that this is just rumor, but in my opinion a likely true rumor.  

If IBM can come up with something near Intel's level of performance, I prefer MS to stick with IBM for backward compatibility sake. 

They can make a bit of improvement on the graphics without spending more money on the games, just look at GTA4 and Falout3 on the PC, much better graphics, still the same game so why not on a newer console ?
I think the next gen will be on par with the PC or a little less at the time it release and the next Wii will probably be slightly more powerful than the 360.

Well, development costs generally increase very rapidly and then plateau for a little while before they start increasing again ... The reason for this is that the the time it takes to produce (basically) the same content at "one level of detal higher" is very similar because the ammount of time it takes to add detail is roughly balanced out by the ammount of time save from trying to tweek an asset to look good; and the rapid increases come because you hit a threshold and the ammount of content needed for a game increases exponentially ... for example, taking a game like MySims and boosting the texture and model detail to match the capabilities of the XBox 360 would not (dramatically) increase the development costs over what it took to produce the same game for the Wii; but when you add in the additional texture work to look like a high end XBox 360 game (Normal Maps and what not) and the additional objects to make the environment look better the workload explodes.

Being that the workload to create an asset or environment for a high-end PS3 or XBox 360 game is not dramatically lower than producing an asset or environment for a pre-rendered movie, I don't think that we're going to cross a new barrier and see dramatically higher development costs in the next generation. What this means is that there is little reason for anyone (including Nintendo) to produce a system that is slightly more powerful than a current generation system, because whatever they do lower development budgets would have to come from a conscience decision from developers.

With that said, people look at the Wii only being somewhat more powerful as the XBox and conclude that similar hardware in 2012 would only be slightly more powerful than the XBox 360 ... This is not really the case being that the Wii launched 5 years after the XBox while the next Nintendo system will launch 7 years after the XBox 360, there was only a 2 manufacturing process difference between the XBox (180nm) and the Wii (90nm) and there will potentially be a 4 manufacturing process difference between the XBox 360 (90nm) and the next Wii (22nm), and Nintendo had every reason to keep the Wii as inexpensive as possible in this generation while they may be much more risk tollerant in the next generation ... Finally, if Nintendo's next system is powerful enough for cross platform development the sales of the Wii will ensure that (pretty much) every third party game will be made for the Wii 2 and ported to other systems.

With the success of the Wii, I'm not expecting much of anything drastic. Nintendo has proven that you could release a console at launch with profit, and now with the sales numbers they can back up the fact not everyone cares about graphics. I'm hoping the next XBox can run Crysis at high settings other then that I don't see them improving much in graphics - just a new optical/data format.

I think that hardware wise - this generational leap has been much less of a significant one as opposed to say the 16 - 32/64 bit leap, or the 32/64 - 128 bit leap.

As for whatever next gen brings, I reckon it'll be another pretty insignificant leap in terms of visuals, I think the focus is going to be more on actual performance than visual glamour.

Right now the PS3 and the 360 simply cannot handle truly detailed and stunning visuals at 1080p / 60fps, which have become buzz marketing words for developers and manufacturers, for games and televisions alike. Next gen will be about bringing those superb visual experiences at the highest possible levels of performance.