Hm...

How about the fact that Microsoft has lost 5+ billion dollars in the gaming market so far?

How about the fact that Sony has whiped out all profits they made from the ps2 by trying to be "bleeding edge"?

How about the fact that (thanks to Sony) launching a console at £400+, no matter how strong your brand name is, will lead to failure?

How about the fact that, with the wii, Nintendo has made more money than Sony and Microsoft ever will if they carry on down the route they headed this gen?

Microsoft have only just recently got the taste for profit, and Sony has been humbled with their amazing falling from grace. They will be alot more conservative next round, whether you like it or not.

• the first 4 billion that M$ lost was due to nvidia and that xbox pricing debacle.. it had nothing to do with with being "bleeding edge".. the rest is due to RRod which is due to poorly engineered hardware
  

• SONY is bleeding thanx to blu ray.. which has nothing to do with gaming but a lot to do with SONY pictures and their need to dominate over M$, apple etc.

• nintendo have been lucky that they havent had to deal with sucky hardware or a need to overtake your entertainment living room.

If SONY and m$ really wanna stay ahead of nintendo they will have to provide something nintendont.. and since mario, zelda and pokemon already belong to nintendo its gonna be high performance hardware or/and an immersive online experience, again something which nintendont

Well then, it seems like you've got all bases covered, and an answer for everything.

The point being, the two companies have always followed the "loss leading"  philosophy. Spin it however you want to, at some point they're going to choose not taking a massive hit just to get their console into peoples houses. There are more rewarding paths to take, Nintendo proved that. There are other reasons, like the cost for developers to actually take advantage of said technology, but that's a debate I can't really be bothered getting into.

They will use technology suitable for the age they are released in. The chances of them trying to out-do PC's again are getting slimmer by the day (PC's actually out performed the ps3 by the time it was released in Europe). They'll take a tiny loss or try and break even out of the gates.

One other reason why you will (probably) not see that large of a graphical leap from the PS3/XBox 360 to any of the consoles in the next generation is diminishing returns on investment in graphical hardware ...

Back in the early days of 3D graphics cards a small (25% to 50%) improvement in processing capabilities produced a noticeable improvement in the appearance of games. Today, we have PCs which are rendering games (like Fallout 3) with dramatically (twice or more) the 3D geometry and texture detail, at twice (or more) the resolution at twice (or more) the framerate and the improvement is fairly minor.

While in previous generations an improvment in processing power of 8 or more times translated into a "generational jump" in graphical capabilities, in the next generation I suspect you will need a much more dramatic improvement in processing power to get a similarly noticeable jump.

It's true, while history shows that graphics has never won a console race.   With the Wii Nintendo has show just how insignificant graphics are when it comes to selling hardware.    Add to that the above fact of little more graphical bang for the hardware buck and you're going to see MS and Sony take their systems in a new direction next gen.    I think we'll see some small improvement in graphics but huge improvement in immersion and accessibility.  Like it or not.

Agreed.. but if it was cost that was killing developers, PC gaming would be dying too.. which it is not, its growing. PC gaming and HD gaming will always have a synergistic effect on the other.

Resolution however is just a simple measure of improvement there are far more measures:

-no. of effects of screen
-improved AA
-improved physics
-number of characters on screen
-more polygons
-improved texture quality
-improved A.I.

Anyone who has seen yakuza 3 will be amazed at the graphics but also at the lack of animation prowess. Games will undoubtedly look better. Doom3 looked like the best thing ever in 2004 and now we have crysis. with the next generation atleast 3 yrs away the industry will probably triple the performance the intel corei7 provides at a quarter of the cost.

in terms of success,the 360 still sells more software per console than the  wii hardware.. If only hardware was a measure of success wouldnt the PC be the perpetual eternal winner here?

Doom 3 looked like the best thing ever when it was a tech-demo in 2002, but by the time it was released in 2004 it wasn't that impressive anymore ... Games like Far Cry and Half Life 2 were also released in 2004, ran on fairly modest hardware (2GHz Pentium 4s and Geforce 4s) and are not that much different looking than the games being produced for the HD consoles.

i hope with nintendo's next system, they use some of the money they made off the wii and add some quality graphics gpu and a hdd, as well as a ethernet port on the system, plus 7.1 dolby surround sound support. if they do all that, plus some innvoation they will be just fine in the next generation of systems.

The key to mass adoption.