I agree, and I think that if MS brings another console too early, the PS4 will absolutely break it when PS4 is released. 

I believe Nintendo will release a major hardware revision only and will keep the Wii a little longer. PS3 doesn't need one. Their strategy is for a decade and that should work well. Hence, Microsoft probably already foresees that they will be thord this gen. If they releases their next console in 1 to 2 years from now a lot of XBOX 360 owners will be pissed.

MS pretty much has to be first no matter what.

Nintendo is awash in money right now with the Wii. Unless the market collapses completely, which I doubt since they could halve the price tomorrow, they have no reason to rush a new console out.

Moreover, as we are seeing with the "360 Wiimote" rumors, the success of the Wii has convinced at least some people in MS that there is a new market that they can exploit. That will be very difficult to do with the current machine - they would need a new machine, dedicated from the start to use a Wiimote like device, in order to tap that market.

OTOH, Sony has a fortune invested in the PS3, and it simply cannot afford to abandon it (the way Sega did the Genesis and Saturn), especially with it's rising fortunes. I find it unlikely that we will see the PS4 before 2012.

In fact, the improvement in the PS3 sales may light a fire under MS's behind to declare victory while it still has a lead, and jump to a new console, I'm guessing in 2010. By that time they could produce a more powerful console for far less than the PS3 debuted at.

The one thing they must be careful of is not to rush to market. 4 years was simply too soon for the 360, and they have suffered for it. 2010 will make it 5 years, but perhaps 2011 will be better (and I suspect that will coincide with the launch of the Wii2).

Microsoft's strategy is pretty flawed. 

It's good idea to release a console maybe a year or so before the others where the extra amount of time the competition has to develop more won't make a big difference-(the graphical difference between the PS3 and the 360), but when you have two or three years between the two, there's a good chance technical differences will be very noticeable and hype by itself would be enough to overtake the console that is first to the market. Just look at the way the PS2 destroyed the Dreamcast. Then the Xbox came out a year after the PS2. While there was a technical difference, it wasn't big enough to stop the momentum. If Microsoft wants to be successful next generation releasing their console somewhere in 2010, they will not be able to use their traditional strategy of boosting the console's power. Sales will have to be fueled by an innovation, which isn't something they are synonymous with. Technology is moving faster and faster and I guarantee that if the PS4 is released in 2012 or 2013, the Next Xbox will get blown out of the water.

Tell someone that is playing MGS4 right now that they need to upgrade their console to the next gen and watch how they turn around and look at you weirdly :P

Before convincing people to move to next gen you got to show them next gen games...

the 1 year head start has paid off for microsoft for sure. If it wasn't for that they wouldn't have stolen all those exclusives, the reason they were able to was because of the userbase they had got over the 1 year head start. The 360 is going to end up being a pretty big step in the right direction in all territories for microsoft, and consider that microsoft had to take huge losses to price xbox at $200 where it was somewhat competitive with the other systems. If they had sat at $300 they wouldn't have sold nearly as many systems.

Every generation the noticeable technical improvements made over a year get dramatically less impressive; even today there was a thread questioning whether Metal Gear Solid 4 was "Better Looking" than Crysis even though Crysis requires a graphics card dramatically more powerful (probably representitive of 2 years of console development) that the PS3's GPU to run it at high detail at HD resolutions at a decent framerate.

I believe we're soon going to hit a point where the only improvements are so subtile that they mostly go unnoticed by the vast majoity of gamers. Basically, consider what the PS3 and XBox 360 can produce visually at a resolution of 480p @24fps; this will probably be very similar in appearance to pre-rendered movies that are released on DVD. Within a couple of years we will be able to reach (roughly) the quality of pre-rendered movies in realtime and the only difference between a system and its competition released 3 years later will be a slight improvement in lighting and reflections.

I agree, I think this gen needs to last longer than the previous; costs are getting way to high and releasing a new box that will easily start off 400+ if not higher, is retarded from a buisness standpoint(consoles = no profit).

Why would the console have to start off at $400 or higher? There is already hardware on the market which is dramatically more powerful than the PS3/XBox 360 and is fairly affordable; two years of cost reductions on this hardware would certainly make it very inexpensive.

Beyond that, I don't think that development budgets will really get much higher than what we're already seeing on the PS3/XBox 360. The cost with HD game development is primarily due to the cost of creating High quality 3D graphical assets (including modeling, texturing and animating); being that most of the techniques used in creating assets for pre-rendered movies are already being used in games, there is very little extra work that has to be added (using the same techniques and using higher-resolution models and textures does not tend to add too much in development time).