I know what diminishing returns is, but I wonder how well this concept can be applied to computer hardware when it is custom made (key word here) for a particular purpose. One usually uses this term to define people in a company; as in how many unit of labor a company needs before it is no longer profitable for the company. There is a formula, and a curve composed of calculus limit formulas. I don't know if this applies to circuitry though.
However, I do know of the word Bottle-neck too which usually is more common with technology, where one piece of hardware hinders the other components, as seen in computer hardware. In my opinion, It's too early tell if any of the components are going to hinder any of the next generation consoles, and it appears that Sony has been developing this machine for quite some time. So only time will tell.