The question that must be answered is what do people want and expect from their video game consoles.
So far, no console that has tried to be more than a console has reached "mainstream success" (though the Xbox 360 is getting close -- see note below) and some have failed miserably (see 3DO, Nuon, etc.).
Most people buy game machines to buy games. Nintendo held that belief more firmly than the other two companies this generation and has prospered (and even it allows for Internet browsing and video streaming is/may be coming).
MMORPGs make a lot of money on subscriptions. But MMORPGs and RTS games played by a small but active and vocal minority of gamers. Catering to them -- and not attending to the needs of the others -- could be a bad long-term strategy. Hopefully, Microsoft is looking to expand its reach rather than limit it.
Mike from Morgantown
I define "mainstream success" with a low bar -- reaching the sales of the Atari 2600 -- approximately 30M worldwide lifetime.
Under such a definition, only the 2600, NES, SNES, PS1, PS2, and Wii have reached that pinnacle. That is one game console per generation. When the Xbox 360 reaches it soon, it will mark the first time that two consoles from the same generation has had such a level of success (and the PS3 will probably make it all three consoles in 2010).
As for handhelds, only the GB, GBA, DS and PSP have reached this level. Again, this is the first generation that there has been more than one product with a large install base (and the PSP is the first non-Nintendo product to achieve this among handhelds. People forget that there have been a multitude of handheld systems that Nintendo completely dominated prior to the PSP).
Also, for the sake of this discussion, I am only considering units that are game machines first. Thus no PCs and no cell phones and no music players. (Sorry Apple, your only entry is the Pippin).
