So we're seeing sustained good console sales  right now, quite late in the generation. It seems to me sales of 360, for example, in the USA being at unprecedented high levels is about existing console owners (Wii / PS3) buying a 360 to extend the life of the generation. Cross ownership of consoles is reaching the masses, not just the hard core, must have every console, gamer.

With economies in the pooh, and 3DS selling quite badly until it received a drastic, and some might say desperate, price cut. Is it a bad time to be contemplating a new console cycle with the $400+ price tag the nexgen machines will come with?

A $299 Wii U would be a draw for people, as it's within the ballpark of current gen consoles. But if Sony and MS are contemplating $399 or $499 nexgen consoles they may really struggle to get momentum going unless economies turn around and people start feeling like they have disposable income to burn. With hyperbolic talk of "lost decades" doing the rounds in places like the UK, the suggestion is that the economic rough times might last through to 2018.

It may well be that the next console gen proves to be one that struggles to sell the sort of hardware we've seen being moved this gen.

Do the big 3 risk heavy losses if they don't take heed of the changed economic circumstances we're faced with. Something the world has not experienced since the birth of consumer electronics?

I think you have a point, past consoles launched with pretty high relative prices (relative to the inflation at the time) compared to this gen's launch prices, and people didn't think they were too expensive

Now if you wanted to launch at the exact same "relative" price nowadays, you'd be doomed for sure unless you found a way to drastically reduce the price of your device

So no, people don't have an apatite for expensive consoles these days

See, prices of console adjusted for inflation:

As long as the economies don't tank then i don't see why not. I mean the West is in trouble Europe will collapse and so will the United States causing a world wide depression.

It's a good point. While entertainment is somewhat recession proof, i'd expect to see the revenue shift to cheaper deals.

The crysis is mostly in people's minds and in newspapers. Real disposable income hasn't dropped very drasticallyin the developed world as far as I know. Maybe just a few % points. And I dont think general consumpion of electronics or entertainment has dropped dramatically either. So generally the consumers do have enough money to spend on next gen.

I think you're wrong on the multiple console buying arguement, particularly PS3 to 360 or 360 to PS3 as at this point the ration of exclusives to multi titles is tiny (TBH unless you really want to be completist you'd be spending a fair amount just to get access to a few more games, and with 360 you're talking about buying into paying for Live as well). That seems to go against your main arguement, which I totally believe is correct.

The Wii showed that the majority weren't interested in paying more for more power, and it's interesting to note that the HD consoles have steadily grown as price has come down and they seem less like expensive, powerful consoles vs launch and more like mass market devices.

As such, and given sales global at the moment both for HW and popular titles, I see no real need for new consoles at a higher price point. I agree that a console launched too soon at too high a price point would likely meet with a reception very like the PS3 at launch - and I don't think MS is immune from that even in US. The minority hardcore might shift but current sales show the majority are more interested in a 360 at current prices than something new.

So I agree on the price/launch part but not the multiple owner part. I think a majority of 360 owners will stick with that and a majority of PS3 owners will stick with that. Some will have both and some will swap from one to the other.

I don't know.. seeing that there is an apetite for a 499 tablet (I love my iPad but it's not really necesary to have one) while the economy is shitty proves there is a market for something expensive while totally not needed..

No, but I think that with the world in the economic toilet there's no appetite for shit.

Being that I've seen people and news stories discussing buying $600 iPads for 6 year olds, I think there are enough people with excessive money (or a poor ability to set priorities) to fully support the release of a next generation system.

All that could be being funded by debt/credit, in turn being adversely effected if there is another credit crunch.

Either that or the revenue is being shifted from capital or capital-ish investments (like homes) to pointless consumer crap