With MS embracing an upgradable/PC-esque style of hardware future, that means the PS4's days as the most powerful game console aren't likely to last much longer. 

I wonder how this impacts everything. I don't have an XBox One right now, but I will buy one if they release a model with better specs than the PS4 for my third party purchases. 

Play your third party purchases on PC?

Do you think MS will release an upgrade able new box with noticeably better hardware than the ps4 at a more affordable price any time soon?

How will 3rd party devs handle it. Currently 3rd party devs optimize their games for each console and provide a more generic (ie more power hungry) version (often later) that runs on all kinds of pc hardware. Will they make a special optimized build for each xbox one configuration, or will it be like pc with extra overhead for all the different hardware.

Why is MS going the Steam box route? Is it a runaway success I have missed somehow?

I would be so down with this as it means i could get Halo wars 2 and any other remaining xbox one exclusives on PC! Im down like a clown!

It could just mean that Microsoft will not enter into a long protracted console cycle and will upgrade their devices every 4-5 years, but that they will also retain full hardware backwards compatibility thanks to sticking to the x86 hardware ecosystem.
But it also enables developers to allow a game to scale across multiple consoles, just like how a PC game can scale between high and low-end.

3rd party devs don't really "optimize" for particular hardware anymore. They build one version and scale it up/down from there, hence why most games look identical between the PS4 and Xbox One -sans framerate/resolution. - PC will sometimes get better shaders, shadowing, textures.
The optimisations are mostly done at the engine level, targeting specific API's, rather than being built to the metal like the consoles of old.

The overheads that PC typically exhibits was mostly because games were not built to the metal, they targeted various high-level API's, games hadn't been made to the metal since the days of DOS.
With Direct X 12 and Vulkan, that console advantage has been essentially eroded away. (Plus we have never-ending driver improvements to thank as well.) as all Platforms are using low-level API's with 3rd party engines optimised for each. (Unreal, Frostbite, Unity, CryEngine, Source and many more.)
Consoles have just become more PC like, drivers, API's and in some cases OS's, Hardware are all PC derived, that's not a bad thing... It allows for a myriad of advantages.

Xbone will not be up-gradable. Microsoft next box will be win 10 and probably like steam box with various config and future upgrade with ram etc

How are steam machine sales? Crap i reckon.

That's not ironic. It's very fitting. Xbox One. The only ONE you'll ever need. You buy ONE. It makes perfect sense if they actually go through with this strategy. It's not ironic, though.

Sony made also similar comments in the past. It would be best to wait and see if a stronger xbox is successful. They could also calling it the PS4K

So Xbox One would become the low end model? So the people who bought an Xbox One would be expected to upgrade already? In 2 years? What situation would not look like immediate plan for obsolescence?

Guys, there is no way that they would throw early adopters under the bus like that.

Well I would hope its more like an iPhone or New 3DS approach.

Superior specs that new games benefit from, but all games should still work fine with X1 specs. That way nobody can complain about their older machine not getting proper support.