If Wii takes significantly more marketshare worldwide by offering new ways to play in additon to old ways to play on a console - what will Microsoft & Sony do next generation?  I think there are only so many options, and I'd like to run through them, case by case.

 - Sony & Microsoft clearly imitate motion control tech in the way Nintendo has made it work on Wii

-  Sony & Microsoft try to invent a new form of casual engrossing disruptive tech that is compatabile with traditional games

- Sony & Microsoft simply support 360 & PS3 much longer than Wii sees support, as Nintendo unveils it's newest console in 2011-2013 and Sony & Microsoft hope Nintendo has run out of ideas about market expansion

- One or both companies leaves the industry

- Sony & Microsoft fail to invent disruptive or imitiation technology, and continue with graphical and media updates

I can see any of the above scenarios happening if Wii becomes a run away hit and obliterates the other two consoles in terms of sales.  If Sony only sold ~25 million consoles, I think Microsoft would leave the market because they know longer would feel Sony posed a threat to the Windows empire.  That number would likely force Sony into huge losses as well, possibily forcing them to leave the industry altogether.

I don't think Sony or Microsoft have any disruptive mass appeal technologies on the horizon, since both companies seem only to understand hardcore and loyalist needs at the moment.  By next generation, Nintendo will have solidified it's staus as the leader in motion-sensing tech, so I don't think copying the technology of Wii would be as affective as either Microsoft or Sony would like it to be in boosting sales. 

Sony & Microsoft will likely support their systems as long as sales remain decent, which means the lifespan of all three systems are interdependent.  I don't think they will wait to see what new tech Nintendo comes up with next though.

My prediction is that 360 will be supported through 2011, PS3 will be supported through 2011, Wii will be supported through 2011.  Wii will sell over a million copies worldwide as late as 2012, PS3 as late as 2011, 360 as late as 2012.  Sony and Microsoft will try disruptive technology while making a hardware & media upgrade, but they will be rejected largely by consumers.  However, I think Microsoft's next console will launch latest, Nintendo's first, and Sony's shortly after, with Sony gaining momentum by launching before Microsoft and at a lower price.  Nintendo will be closer in terms of cpu tech specs because they will not be sure if they should be inventing a new disruptive technology or continuing with the old one...they will be proud of Wii's success, but confused at to how it got there.

So no, I think the generation to follow is the last gen of graphical increases for consoles, but I think we are getting much closer now than ever before.

I have been thinking about posting something like this, but decided no to. Great analysis. I still think that this may be the last one. However, if it isnt, then the next one will surely be it.

With all due respect, that's not why MS is fighting for this market. They're not fighting Sony because they're a threat to the Windows empire, they're fighting Sony and Apple for control of the living room.

I don't think Sony bowing out of the industry would stop MS from producing another console; they still have Apple to deal with.

Digital distribution through the living room is going to be a multi-billion dollar business very soon. MS wants a piece of that and I don't see them leaving the console business for any reason; it's a perfect vehicle to use to penetrate the television set.

As for the thread title itself, no, this is not the last generation of graphical increases.

Given enough time, all components/products fall in price. Example: CRT TVs. It's getting to the point where low-end LCDs can be manufactured and sold for a miniscule premium over a high-end CRT of similar size.

Another example: DDR RAM is cheaper than SDRAM today, but when it came out it commanded a premium over SDRAM. However, since DDR RAM is the current standard, its prices have fallen. Now DDR2 will take its place, as DDR3 slowly becomes mainstream.

Eventually new technology replaces old technology, and it becomes cheaper to implement the new technology instead of the old. Hence, console manufacturers (especially Nintendo) will opt for the better-performing piece of technology, not because of its performance, but because it gives them a lower manufacturing cost, a price advantage over competitors, all the while maximizing their profit margins simply because the new technology is simply cheaper.

rocket pig i know they are going for control of the living room primarily, but if ps2 had become used as a computer of the living room it is likely that a new os would have had the opportunity to be packaged into hardware for an differentiated market of computers - and that is/was a big threat to microsoft. your mother..i know technology gets cheaper over time, but i'm more concerned with the following: Will there come a point when going sideways (increasing gamer to game interfaces) becomes so much more important than increasing graphical power (going 'up') that no one would buy a console just for prettier pictures?

"where does that leave all of these developers and publishers who have already made big bets on Xbox 360 and PS3, for whom big-budget AAA titles are at the core of their DNA?

Can they adjust, or are they dinosaurs waiting to die out as the dust from the Wii explosion blots out the sun?" ...... N'Gia (LevelUp)

Personally I see Wii 2+ or similar systems getting better by steady increments anyway until the point of visual saturation is reached, then only game play will matter... now that will be something

You know, it is, but the funny thing is a "set top box" without videogame hardware would actually make a lot more sense.
Similar to Apple's iTV box.

There's no particular reason to piggyback videogame hot, state of the art graphics hardware that only has the function of playing games, into a set top box product. Which is exactly what say, a Xbox360 is. In other words, if you built a set top box just to stream and play all sorts of internet and PC streamed media, you could leave out a lot of the heat and expense involved in playing high end games. And the people that dont care about games would also get a much better deal, since it would be cheaper.

Apple's iTV for example, is launched at $299 which is already $100 less than premium 360, and I'm sure rather than losing, Apple is making money on the hardware. That's because by not playing games the tech specs of the iTV are much more managable.

I think it makes sense to duplicate your set top box functionality in a video game system, but I think you also need to market a true stand-alone set top box. I think such a device that could stream all manner of videos and audio and codecs from your PC, (including Xvix and Divx, etc) as well as function with the various pay movie/music stores around, as well as even work with things like youtube, would be pure genius. It's a market waiting to be filled and whoever does it first is going to tap a huge market. Such a box could also be much cheaper, and I can see it falling to $99 pretty quickly, which videogame systems cannot do.

Xbox 360 has too many codec limitations, and the same with Itv currently. They do not play enough content, probably because they dont want to promote piracy. So it make take a small company not as worried about such things to really bust this market wide open.

Actually, both are technologies that push upwards instead of sideways.

The Wii isn't the first implementation of "waggle" (cue Microsoft's Sidewinder) but it is the first of its kind to be the central part of a console, not an optional peripheral. This is what makes the Wii successful, motion limitations (warts) and all. Come next generation, any console manufacturer will be adding some sort of "unique interfacing possibility" on their console.

Future generations will see interfaces being developed in new and unique ways. It's already happening with the prevalence of usability and accessibility. This development is unpredictable, as it's a relatively nascent field in the sense that only now is it really being taken seriously by everyone.

In terms of graphics, this is an unrelentess pursuit of ever-increasing polygons and realism, mostly thanks to the PC industry (of which without them we wouldn't have the consoles we have today). PCs have had "HD" for ages. This will continue, partially because companies like nVidia and ATI need to continue selling technology to survive. Ditto that of CPUs. However, it's not just gaming that drives hardware sales (and their development); professionals need the horsepower as well to get their job done.

What we will probably see is the solidification of the 1080p as the resolution standard for the next decade. This is good, as it sets a universal benchmark, a fixed target for hardware manufacturers to meet (and consumers won't be forced to buy another TV anytime soon!); so instead of focusing on higher resolutions, they can focus on image processing quality. As PC technology continues its push towards "more of this and better of that", this technology will eventually trickle its way down to consoles.

Both "waggle" and "polygons" are important. However, the graphical side of development tends to be linear (you can safely extrapolate existing data to predict what the next generation of graphics cards will be capable of) but with usability and accessibility, well, it's a new study that is just beginning to legitimize itself and there is no linear data to extrapolate, so this is where we will see newer and more innovate ways of interacting with the machine. But in terms of which is more important, I'd say usability and accessibility is number one (how many people do you know that won't touch games simply because they are so intimidated by the sheer number of buttons on a controller?), but graphics will be a close second.

I think console companies are just realizing how they've alienated vast legions of potential gamers by having controllers that look like they require a PhD to operate while games like Bejeweled attract throngs of "non-gamers" because it involves nothing more than a mouse and one button to play (and have tremendous fun). It's a "new" field (it's not really, but it is in "vogue") and with governments legislating in favor of accessibility and usability being touted all across the internet, this is where the focus will be.

So, in the end, graphics and interface innovation both go hand-in-hand, but given current trends, interface will be more important for the next decade. My prediction.

No way! Until there is a way to convert graphics of reality into video games, there is always room for improvement.

There was a way to do exactly that, about a decade ago, but it bombed miserably.  Remember FMV?

This is what I just don't understand about people who want the absolute best in graphics - rent a movie!

FMV died simply because while it looked like the real deal and sounded like the real deal it did not allow you to interact like the real deal!