I think he may be right.
Wii has proved that graphics are good enough for most consumers. Why continue to push the bar they can't afford to?
All systems have other ways of interacting with games maybe the "next generation" is going to be an emphasis from Sony, Microsoft and 3rd parties in using these other solutions more adequately to create more natural ways of interfacing and greater immersion.
Making a new system doesn't make any financial sense for anyone in the next 5 to 10 years and we know Nintendo will milk success for years. What technology could greatly change our interaction that will come down in price fast enough to be viable to start another hardware race? I'm sure Sony and Microsoft have hopefully learned that increased graphics aren't enough.
