First out of the gates? Most likely Microsoft if they decide to continue with the console side of the business. Followed by Nintendo and finally Sony. I think Sony will try and push the PS3 out as far as they can to make a profit off it. If the system all of a sudden stopped selling, we could see Sony out the door first. I think the PS3 will be sticking around though ;) so I expect MS to take the pre-emptive strike again with a console that's smaller then the 360 and named something other then Xbox, they'll also market it without the MS name attached to it much like the Wii.

MS could easily re-address the problems with the 360 and re-release it under a new name. Add some cache to the CPU's, add more Ram to the system get a slightly tweaked graphics card and they'd be set to go. They may even want to drop the video card and rely on Ray Traced graphics by going with 2 6 core cpu's based on the same design as they currently have now with their CPU but with dedicated cache per cpu and a faster system bus. 12 core's 4+ ghz each would easily handle Ray Traced graphics.

 Nintendo lost last two gens because they abandoned their strength and tried to play the me too game, building a system just like their competitors, Nitendo does best when they go their own way, , look at the NES, the gameboy, DS and the Wii, all of them very different then their competitors at launch, all dominated, but the similar ones, SNES, N64 and GCN faced very stiff competition and two of them lost (Snes only won because Sega made some bad moves )

 Really? Apparently Avinash does...

 I don't know the future, I just know trends

Nintendo will release a new console first. This won't be because Nintendo releases anything earlier than the others, but because Sony and Microsoft have already released about 4 SKUs each for this current console, and they're probably going to keep doing it to the point that it becomes uncertain when it stops being a new SKU and starts being a new console.

I've done thought exercises to figure out what Sony or Microsoft would need to be competitive with Nintendo again. so far I've just been drawing blanks. I can only see 2 ways for them to update in terms of motion sensing: 1) they resist because they don't want to admit Nintendo's success, and as a result they implement halfass motion sensing basically like what PS3 has, or 2) they admit to Nintendo's success and implement a control style that is pretty much exactly the same. Admittedly, they may decide to simply NOT implement motion sensing at all, but I just don't see that lasting over the next 5 years in which the Wii's controls will grow more defined and polished.

When I do the same exercise for Nintendo, it's much easier to see what should be done to repeat the success of the Wii in the new console. When Nintendo finally does release a new console, the WiiII, the controls will pretty much be exactly the same, but everything will have updated technology, faster processor, even heavier video memory, and probably a hard drive of reasonable size, or support for USB flash drives, etc.
The speaker in the Wiimote will be much higher quality. The camera in the Wiimote will be able to sense infrared, but will be of high enough quality to be used as a straight camera as well for PSeye style games, but combined with infared sensors as demonstrated in Johnny Chung Lee's videos. The Nunchuck will have rumble, and also a built in Microphone which will make voip easier, as well as kareoke games or incantation games, like what was originally envisioned for Harry Potter.
The Wiimote will still use bluetooth, which means that old Wiimotes can still be used to play regular Wii games on the WiiII, or possibly even new WiiII games, provided they don't . Both Wiimote and Nunchuck will have a second accelerometer to allow for calculating the spin access and allowing for complete 1 to 1 movement.
By the time the new console is released, it will likely be reasonable for Nintendo to include HD output, and like what the 360 can do now, it will be able to be hooked up to a laptop as a cheap way of playing on a highdef screen.

The real key to this is that the WiiII may or may not be backwards compatible with Gamecube games, but it absolutely will be compatible with all regular Wii games. Because of the type of library that Nintendo will be building over the next 5 years, this will be a massive list of titles that Nintendo will have right out of the starting gate. Even if Microsoft or Sony decide to implement motion controls, they won't be able to compete with the already developed list of Wii games which already have motion controls implemented. It'll basically be a repeat of how the PS2 rode in on the success of the PS1.

 Then you do of course know that the term trend implies that it'll be relieved by another sometime? That's true with all things. I think predicting the market has gotten harder than before, and I think most agree on that at least.

i want to say nintendo,but why would they,wouldnt they want to ride the sucess of the wii for as long as possible...idk,little early to tell

 Not really, the more things change the more they stay the same, people remain more or less the same, they still want fun, and Nintendo brings fun for everyone not just 13-35 year old males, at a mass market price, Sony and MS on the other hand have their niche and fight tooth and nail over that niche, which is why they are limited in their growth potential

I really cannot understand why people keep claiming Nintendo will be out first. Even if the doom sayers are right and by some miracle the Wii comes in last Nintendo will still not be the first to launch. They have never ever been the first out the gates. Infact, they are always the last of the major consoles to release every generation. They were the last to launch after the N64 got beat. They were the last to release after the GC got curb stomped. They will be the last to release after the Wii has run its course.

Expect the Wiistation720 in 2010. After Nintendo buys out both companies with their INSANE PROFITS FROM THE WII AND DS!!!!!!!!