There comes a point when it is not financially or technologically viable to keep bumping the spec.

Regardless I believe the Neo will not be a 4.2Tflop machine when it is revealed.

if rumor is correct and the Neo develop kit already sent out, the most they can do now is overclock its CPU and add in another 4Gig Ram at least to shorten the spec gap and still be cheaper than Scorpio

Maybe so, but I don't think MS will allow Scorpio to be less powerful. 

They made it pretty clear that that horsepower is important to them, the one guy in the trailer even says XBox means "the best hardware". 

How I see all of this comparison is that Sony has the market by the balls right now.

Sony can release the Neo weaker than Scorpio and it still wouldn't matter, heck Sony doesn't need to release a new PS4 this gen if they don't want it because the PS4 will still sell stronger than their competitors.

And because of this, developers will continually make games for the console with the bigger user base it's that simple. They wont care if one console is much more powerful than the other as long as their final product works fine on all consoles (and especially the console with the most user base). We've seen this done last gen. The only way devs will step up is if MS themselves step up and create exclusive games that maximize the Scorpio and causing their sales to explode shifting the user base.

So to answer the OP:

Could Sony discard the Neo due to the Scorpio's power? Definitely.

Sony is in a position where they are now a power house and they don't want to look small compared to their competitors. Especially when Scopio is being titled as 'The Beast'.

But do they really need to? No.

Personally I think Sony should stick to their plan and create the Neo that's based off the rumours: Simply just to run VR smoother, upscale games at 4K and play 4K blu rays. Their intention was to never produce real 4K games. This would allow Sony to not break the bank they worked so hard to rebuild...we all saw what happened with the PS3 and 'the cell' lol and I doubt developers would sway away from them now so Sony should just play it safe for now.

Anyways this is all my opinion but I'm down for a rebuttal, I could definitely be missing something that makes this all mute :)

This Eurogamer "spec analysis" is complete bullshit.

Neither the Neo nor the Scorpio uses Jaguar cores.

It is really baffling to read this thread and all these reality-challenged posts where people start to argue with:

"They can simply" and then comes a variety of -add memory, - change the cpu, - add another gpu, etc.

Sorry peope, but the ship has sailed, possibly a long time ago.

If they bring the Neo this year (or even early next year), the chips are being manufactured, the factory contracts are sealed. Furthermore, there is absolutely no need to change anything. The Neo is designed to get solid 1080p for those who need that, and reasonable VR in conjunction with PSVR. There is no reason at all for Sony to react to anything Scorpio related.

Duh

Sony will definitely want to maintain the most powerful console moniker.

I do not think so. But it would the right thing to do.

But the Scorpio is according to Digital Foundry being based on thr upcominh AMD Vega GPU, and all in all being 20% faster than a R480, and over 40% faster than a PS4 Neo.

So think Scorpio getting a GPU on par with the Nvidia 980Titanium, a GPU that quite smoothly can play games in 4K.

the RX 480 is 6TF just like the scorpio

just like they send out 4GB PS4 devkits