So long as it is many times more powerful than the PS3 it doesn't matter if it is moderately powerful.
Well, I hope you're right, but I don't see that being the case if third party development for PS4 is like Wii's was last gen and 720's is exclusively like 360 and PS3.
Won't happen. Even if XB3 is objectively technically superior to PS4, it won't be Wii vs PS360 superior. Heck Wii U is unlikely to be technologically inferior to XB3 the same as Wii vs. PS360. 3rd parties are most interested in selling games. They don't really care which console sells the most. It's the console manufacturer's who pay (in one way or another) for 3rd parties to pretend they care.
What will limit 3rd party support on PS4 is ease with which the principal version of a game can be ported (be it PC, Wii U or XB3). If it's easy to port then 3rd parties will support the platform, because for minimal porting investment they gain access to more gamers. If it's hard to port then 3rd parties will need to be convinced to put in the effort.
Consumer perception that they will get something better than what they already own will determine whether people pick up the new generation. It won;t be about whether XB3 is seen as more powerful, but how much more powerful PS4 is vs. PS360.
“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell
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