1.) Microsoft will once again be first in the market. Why? because they strongly believe in gaining market share ahead of competitors, a good lesson they've learned in the Xbox era as well as the 360 era. The PS2 ran away with the market because it came out a ways earlier than the original box, and when the 360 tried to do the same, they were held down by massive hardware problems (RRoD). As a result, they weren't able to take full advantage of their year's head start. This time around, I think Microsoft has learned its lesson and they will get that head start once again, but this time without the crazy issues. I expect the console to arrive on the holiday season of 2010.
2.) Microsoft will be using pretty much the same technology in the next iteration of the Xbox, only of course upgraded to a certain degree but nothing mindblowing due to their need to get into the market first. Basically, they will be using current generation techs that perhaps can be compared to a gaming PC. I doubt very much that they will adpot blu ray because their main competitor is the one pushing the disk media, or else they will have to pay Sony some pretty hefty royalty fees. In that case, it is a possibility that they will either use those new V-layered DVDs or perhaps they'll resurrect HD-DVD but only for games.
3.) Sony will most likely be the only player in the market to go very high tech, which will make their next console the last entry. Every Playstation has come with it a new storage format and I don't expect Sony to change this pattern with the PS4. The new 500gb blu ray disks, which will likely be in mass production by 2011-12 (or some other kind of large capacity disk) will probably be the format to be used in this next console. Another reason why they're likely to go very high tech once again is that Sony is not just a games maker and they have always been primarily an electronics manufacturer. They will need the PS4 to be compatible and powerful enough to take advantage of their other lines of hardware, especially the new OLED TVs that will come out sometime in those mentioned years.
4.) Because of the yet untapped potential of the PS3, and the lessons learned from prolonging the lifespan of the PS2, Sony will likely only release this console when the next Xbox is already 2-3 years in the market, and they will continue to promote PS3 as comparatively powerful to it because of blu-ray. Another reason why I expect them to wait it out is that they want the manufacturing costs of their new technologies to be relatively low so that they won't need to sell them at a loss.
5.) Nintendo might just ignore the next generation. Why? because i think the Wii will continue to sell strongly even when Sony and Microsoft have already sent in their participants. The Wii is extremely profitable, is set to outsell the PS2's lifetime sales, and it would be a foolish move to release a new console and effectively kill off the sales they would have had. Nintendo has nothing to lose by not going in at all, and risks much because their motion controls are now out of the bag, which will be copied by their competitors and they will no longer have an edge. The only reason for them to enter the market at all is if they have something new up their sleeves.
6.) Of course, there is the possiblity that Nintendo will go with just an upgraded release of the Wii, containing just simple hardware offshoots or bundled together with new peripherals such as the Motion Plus attachment, in order that they can still sell it at the same price or lower. This will enable them to still "participate" in the next gen console war with the cheapest console and at the same time maintaining their image as the family friendly casual choice.
7.) That said, motion controls and touch sensitive technology will be the wave of consoles in the next gen. Sony and Microsoft will invest heavily in Wiimote-like controllers and perhaps add a new idea as well that is in line with the gamer actually getting involved in the games physically.
8.) With the focus being on such control schemes, power and performance won't be the focal point of any of these companies, but rather it will be more on garnering popular game franchises. Sony, of course, will attempt to use the PS4 as the integrator of all their high tech electronics gadgets, but they will limit the power in the PS4 to be just enough and no more than that so that they can profit from the console.
9.) And no, physical media will not go extinct. Digital distribution will go alongside the disks and they won't interfere with each other's sales. Why? because simply a large chunk of consumers don't have a fast internet connection, and some of them don't even have internet at all. If physical disks are eliminated, lots of people will be alienated from the games. Another reason would be hard drive space. Even if in the future consoles will come with 1 terabyte of space, it is a known fact that games are only getting larger. So with larger hard drives comes larger games, and they will be filled up too quickly. If you think about it, digital distribution of games has been in PC gaming for quite a while yet it hasn't interfered with the sales of the physical disks. Besides, Disks are cheap to mass produce and don't need a day or two of downloading, which will really take a long time even with a 10mb+ connection.
10.) The casual gamer is going to get a lot of attention. First off, the prices of these consoles are just going to hover between $200-350 to make them purchasable for those who aren't really hardcore gamers. Second, there will be less new IP's that cater to the hardcore gaming audience, and instead the focus will be on building franchises such as Metal Gear and Halo to satisfy them. Instead, more of the new IP's will be dedicated to the casual gamer simply because there aren't that many known franchises out there for them. The plan is basically to convert these casual players into hardcore gamers.
