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This has been a lesson hard learned but one that the industry is thankfully learning from rather quickly. Even Kaz had made mention of Sony realizing the shortcomming of trying to reach too high too soon and will be scaling back their projects to achieve more realistic expectations for games during this early part of the generation. The Wii is perhaps the epitome of this lesson showing the merits of modesty, innovation and manuverability vs excess, expansion and Demographicentricity.

In every gaming generation of the past the technology for the next gen had always been there just not the economy, and it was just a waiting game before the economy was ready for the next step to be taken. This, however, was the first generation that there was no real generational technological step forward waiting for us, we had in many respects, plateau'd. Sony and MS responded to this by trying to create their own technological step forward but in doing so sacrificed economy doubling the cost of their average console in just one generation (the ultimate indication that this was not a true step forward, but a forced one).

If I may indulge my inner Nerd, think of Dragonball Z and the Super Saiyan transformation. When facing Cell, Vegeta and Trunks trained to go beyond regular Super Saiyan (think Last Gen consoles) and in doing so they forced themselves to ascend beyond the level of regular Super Saiyan but it wasn't a true next step forward, so as a result they were powerful but slow and lacked stamina, Vegeta held back though to keep himself at a manageable balance between agility and power (360) but Trunks went even further for more power at an even greater cost to his ability to fight (PS3). However the clever Goku and his son Gohan trained to reach the upper eschelon of what regular Super Saiyan could achieved (Wii) which allowed them to finally reach the true level beyond Super Saiyan, Super Saiyan 2 (whatever will succeed the Wii).