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There is that whole "point of diminishing returns" trend to keep in mind as well.

That point at which vastly over-engineered hardware (so advanced, nobody utilizes its potential out the gates) provides nothing more than initial marketing bullet points to convince consumers that they are buying a "revolutionary" piece of hardware.

Some buy on this notion alone, but at an inaccessible price, you are cutting out the largest pool of consumers.

And revolutionary tends to be extremely short lived, especially when it comes to semiconductor based electronics.

The only advantage to starting from the ground up with all proprietary components (BD, CBE, etc.) is the assurance that over time, these components will be drastically reduced in size and cost as opposed to off the shelf components, which are typically a bit harder to volume source over time (Xbox GPU) and harder to reduce in price over time (Saturn). It's a gamble either way.

But in the interest of cost cutting, the better option is often to make more with less (Wii), essentially taking advantage of lower priced components and updated versions of components (faster) used in the previous generation.

End result: cheaper product with presumably notable improvements over the predecessor.

Nintendo will probably take the same approach next generation, which by then will allow them to produce an HD console with a better storage system, improved controls for less than the current generation of HD consoles and still pull a profit on each unit from the beginning. That's if they stick with the safe strategy.

Worst thing Nintendo could do is throw a curve ball that bucks the industry trends (like the expensive proprietary storage format of the N64) and alienates 3rd party developers. I don't see this happening.

I would not be surprised to see a PS4 and Xbox3 similar enough in performance and features so as to be practically indistinguishable beyond their 1st party game studio libraries.

Meaning, all three will probably be very similar in cost and performance, leaving 1st party IPs the key determining factor in which platform to choose.

But, only the future can tell.