My main point with this thread was trying to show people that you can't always expect the very latest technology for home/ handheld consoles. The expectation that it should be as good as a gaming PC is just too damn high. The price wouldn't be consumer friendly and the console would probably end up not being as successful as it would if lesser technology was included.
Many people here don't want to count the Neo Geo in the 4th generation of home consoles. To me this is a perfect example of what happens when you have the latest tech in a system. Neo Geo wasn't looking to compete with Nintendo and Sega. They made money because they didn't sell it at a loss but they didn't sell too many because it was very expensive for the system and games. They released this system in 1990 in Japan and 1991 in USA around the same time the SNES was released. It was more powerful than the SNES. "The Neo Geo was ranked 19th out of the 25 best video game consoles of all time by the video game website IGN in 2009." (wiki) It seems most people consider it a video game console and part of that generation. It was released during the 4th generation. It is apart of that generation.
Fast forward to this generation.... PS3 should have been the clear winner (which everyone thought was going to be the case). They dominated the previous two generations and had tons of loyal consumers. They then release the PS3 with a 499-599 price tag loaded with latest technology (cell, blu-ray, etc). It appears most people aren't willing to drop 500-600 dollars for a home console system. Who would of thought that? Were could they have realized that it wouldn't fly well with the consumers? CD-i, 3DO, and Neo Geo say hello! They sold the PS3 at a loss even with that high price tag. If they priced it to the actual price then even less people would have bought it in the beginning. If you release a video game system that cost 600 dollars and it is being sold for a loss then something is terribly wrong. You tried to squeeze too much latest tech into that system is what it means.
It just seems that gamers have the expectations that their consoles needs to be good as the current high end gaming PC. It will never be that good. They need to use parts that are somewhat dated but within a price range to make their consoles launch at a price 200-400 at the most. Nintendo knows this, Sony learned their lesson, and I am pretty sure Microsoft knows this. I have no intentions of spending more than $350 for a video game console ever. Price is only one factor like I have said many times.... However, launch price is a pretty big factor when dealing with most consumers looking to upgrade. You think a parent is going to buy their kid a 500-600 dollar video game system for Christmas? Maybe if they are rich, but most people I know have a limited budget. No matter how much technology you stuff into a machine the launch price has to be within most people's budget.