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We are rapidly approaching a time when further enhancements to graphics, AI and Physics are unnoticeable and/or to expensive to pursue ...

This (of course) doesn't mean that companies will not release new hardware, but it does mean that the focus of new hardware will (likely) change; and you could argue that the Wii represents the begining of this. As an example, we are probably going to see someone revist the virtual boy when high-definition LCD screens are light enough and inexpensive enough.