Multi-processor PPC boxes are extremely easy to scale. Also, it's not out of the question to have 8-core or higher PPC CPUs (or whatever goes into the 720).

The Cell is anything but cheap, so I'm not sure why you believe the Cell will be cheaper than whatever MS decides to put into the 720. And to determine relative performance of CPU architectures a generation away is pure folly.

Just like the Amiga, the PS3 is a technological wonder of tightly integrated, specialized processor functionality. Just like the Amiga, the PS3's specialized architecture will be difficult to scale to the next generation. Not to say that it can't be done, but if vectorized processing was the best thing since sliced bread, Cray would still be the kind of the mainframe hill.

And as Sony has demonstrated this generation, it will cost a fortune to develop and to develop for.

The phrase "one-shot-wonder" comes to mind...

EDIT: In all fairness, a defining characteristic of video game consoles is that they're one-shot-wonders.  How many video game systems can anyone list simply used more powerful versions of the same hardware from the previous generation?  Anyone?

TheRealMafoo you obviously dont know what the fuck you are talking about.

Most you ppl should just stick to playing video games :)

When the next generation XBox is released it will be trivial to produce a system that is far more powerful than the PS3 at a very consumer friendly price ($200 or less); this is the beauty of semi-conductor technology. At the same if Microsoft produces a similarly advanced system (as the XBox 360 was upon release) it will be nealy impossible to produce graphics, AI and physics that were a noticeably improvement for a couple of years after its release. As a result the hardware differences between these two platforms will not be relevant.

Now, Microsoft is (and always has been) more of a services company than a software company, and the real advancements in the next generation XBox will likely be in the services it offers.

Isn't the Cell a flop? Sure it work's great for PS3, but it's been a flop for Sony otherwise as they haven't been able to get anyone else to buy into it. I doubt it has any future beyond PS3. Besides that Sony is moving away from that side of the business.

As for CPUs they have recently found a way to drastically reduce the size of transistors and they are already working on CPUs that will be many times more powerful than even the quad-cores.

I expect both Sony & Microsoft will get 3rd party CPUs for their next gen machines, and the PS4 will likely not have BC either because of the uniqueness of the Cell processor.

i don't know why we're even having this conversation. Regular Xbox just used intel chips. I don't see why they can't just use Intel Chips again (or even AMD). And why does it always have to be custom made anyways?

They could just pop a standard burly intel Quadi or Octo core chip in there (whatever MS prefers) and go. Consoles are essentially computers anyways.

And since developers are used to programming with DirectX and Intel architecture, then dev time should be pretty quick for Xbox720 games.

 Essentially the next gen console should look a lot like a Mac Mini with a TV connector and some proprietary controllers. Put a piracy lock on that sucker and release it out to the public!

Graphics and Computer horsepower is so cheap and commoditized now-- it makes no sense to make custom chips when any old thing will do.

It is also worth noting in microsofts favor that multi core computing has come along significantly just in the relatively short period the 360 has been out. Like some others have said it's not unlikely that the next system may include 8 cores or more. While the cell is a beast at ray tracing and operations like that most current quad cores could come close to matching it in overall perfomance.(not a rip on the cell it is a great concept, but very very specialized)

What, no love for GPGPUs? Meh, you guys phail big time.

Lol, I needed that laugh.  Thank you.  You seriously need to read up more on Intel's future chips and stop buying into the PR hype Sony is feeding you.

Let's not forget the CPU in the X360 is made by IBM.  You do know that IBM is the main sponsor and designer of the CELL BE, don't you? 

Just to further my (and most other people's) point ...

Every major manufacturing process improvement doubles the number of transistors on a chip, while improvements in semiconductors increases the clockspeed that a processor can run at. In 2010/2011 Microsoft should be able to use either a 32nm or 22nm process which would mean that they will be able to increase the number of cores on the XBox 360 CPU by 4 or 8 times; at the same time you would expect a clock speed increase in the range of 2 to 4 times.

The Cell was developed by Sony, IBM, and Toshiba, Toshiba alone could not give it to MS.