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They could just improve the RAM, GPU, and make some sort of hybrid CPU to make the PS4.

The hybrid CPU could be something like a Cell with multiple PPE's, so it would be competitive with the Xbox's CPU on direct ports and still have the additional abilities of the SPE's on top of that both for exclusives and ports that choose to use it. Ports don't have to be so much better on one console to blow the other away to be successful, they just have to be undeniably better, even if the difference is minimal.