Everybody is overcomplicating this far too much.
Compare video games to, say, cars. Go to any car lot. You'll see minivans, trucks, hybrids, sedans, sports cars, and luxury cars. You'll see cars that sell for $15,000, and you'll see cars that sell for $50,000.
How the hell can you call a 2007 Suzuki Aerio the same generation as the 2007 Hummer H3? Different companies, different lines, different purposes, different prices... but they're sold at the same time, and someone who doesn't have a car may well buy either one with equal probabilities.
Same thing with consoles. But each company only has one model, and the product cycle is a vague 5 years instead of a strict 1 year.
"Generation" is whatever you want it to be, but has more to do with marketing than technology, or even release dates.
If Sega were to re-release the Saturn and market it successfully enough so as to get 50K units sold worldwide every month for the entire period between January 2008 and December 2010, those 1.8 million units would be enough to include them in the same generation as Wii, 360, and PS3, even though the original release was over 10 years ago.
Marketing.
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