I'm just going to assume Nintendo, Sony and Microsoft will be the players next generation.  I'll leave the ideas of any company entering or leaving the race up to commenters if they want to consider that. 

My concern is whether the 3 consoles will effectively differentiate themselves, and perhaps what they will change.  Obviously Nintendo has done this effectively in the current generation.  They changed the game and I think it's safe to say they'll be continuing on the path their taking with the Wii.  What will they do differently?  Will they focus on fighting the "kiddie" stigma attached to them perhaps?  Better online?

My main concern is with Sony and Microsoft.  Will they continue on with their technological arms race that's been raging all gen?  Microsoft is obviously the one that could afford to do this longer.  I think Sony will definitely be taking the route of Nintendo, backing out of this race to some degree because of a mix of necessity and and a desire to stand out.  I genuinely believe Sony will learn from their mistakes and adapt accordingly.  I could easily see them pulling out a "victory" next gen, even though they won't be the favorite like they were before this gen started.  They have to focus on their ridiculously good first party games, which in my opinion is the only company that can rival Nintendo's.  They will go more "casual", creating a better balance between "hardcore" and "casual" games thus changing the perception of them.  And again, price, priiiiiiiice, PRICE.  I really think they would be in a much better place right now if they would've been cheaper, regardless of the "price point doesn't matter" argument some level.  Before this gen the Playstation was going to win, Nintendo was going to get killed, and Microsoft was going to do better.  That price changed everything(along with the Wiimote).  Don't get me wrong, the Wii might've still been in the lead, but it would be much closer.  So their next gen console will be $400 upon release. 

Microsoft, well, I believe they are going to be the most static in terms of approach, if only because they can.  They have the weakest first party capabilities by far, perhaps they will try and change this.  They will focus on online and do mostly what they're doing now, making sure that they get all the good stuff on their system.  They might experiment in being more "casual", but they won't go too far.

So basically, I think the greatest change will come from Sony.  I think they will be the "hardcore"/"casual" bridge between Nintendo("casual") and Microsoft("hardcore").  I apologize for the "hardcore" and "casual" labels. I know they're dumb, but I know most of you understand what I'm trying to convey with the labels. 

I would think that Nintendo, in delivering a more powerful experience, might try to win back the core gamer without alienating their new market. They'll put forth a compelling reason for the "casuals" to upgrade, but in doing so will create something technically intensive that will catch the eye of core gamers. Nintendo will also have far better 3rd party support from the beginning, which will also help in balancing the platform's appeal

Sony knows the casual game well, and will probably also try to strike a balance. They'll still want to make a media center solution, but will look at the Wii's success, and see a media center solution for the everyman, not for those on the cutting edge of the technology game. Something with a remote-like controller that everyone can use not only for their gaming, but also like a Blu-Ray remote, or an in-the-air mouse for web browsing, as well as a Dual-shock controller for "Classic" purposes.

Microsoft is harder to follow. Theirs is the most ardent "hardcore" following, and Microsoft could go a number of ways. They could continue to cultivate their niche in the market and try to build convergence with PC gaming, they could try for a more accessible console, or they could make a cross between the two that winds up satisfying no-one. Microsoft, i think, is the unknown quantity for next generation

At the end of the day all three companies are going to look at the success of the Wii and try to emulate it ...

The interesting thing will be that all three companies are going to associate the success of the Wii to different factors to a certain extent, and as a result all three next generation consoles will have some drastic differences.

Probably, its likely that they will follow divergent strategies in the next generation or copy where they think Nintendo is going this generation. Whether they work depends as much on implementation as well as how the other companies strategies relate to each other.

For example: Microsoft goes all out for performance and both Sony and Nintendo follow each other.

Pro: Early adopters like high technology.
Pro: Can implement features like Co-Op in all games when other consoles cannot (for example)
Pro: If all consoles are the same, its a point of differentiation with the competition.

But if for example Sony does the same thing, then its not as safe a position to be in.

I would say that Microsoft of all the companies has the most incentive to use high performance because they have the PC market they can synergise with to justify the performance of the console. Sony doesn't have that luxury for example. It also follows that they will be the only company able to loss lead to any apreciable degree next generation considering their Live subscription service.

Thats just an aside, in any case I expect Microsoft to play the Windows card in the next generation because a next generation interface makes it plausible and its one market they need to enter before any competition gets any apreciable traction there.

I expect Nintendo to play the Wii card like they did this generation, simple and elegant solution. Its pretty much assured that as far as interfaces and design are concerned they will follow on from the Wii with another Wii.

For Sony, they have done the most research using cameras and I would expect them to use that type of interface as they can also upgrade the PS3 quite easily if they adopt it. The Cell processor also produces the level of floating point OPs you need to implement a good camera interface and I said it before, the PS3 is the only console this generation which can implement it properly. They also seem to be involved moderately with 3d, so they might head down that route also.

i believe that either miscrosoft or sony are gonna exit the console market next gen

I wouldn't think so. Its been proven time and again if you follow the successful console using a similar strategy you'll only get burned. They will play to their own strengths more likely, rather than try and follow Nintendo into their fortress.

I think there may be a misunderstanding here ...

Nintendo, Sony and Microsoft are all going to try to understand why the Wii was successful in this generation and why the XBox 360 and PS3 were not nearly as popular. Now, based on the values and beliefs of each of the companies they will probably come to different conclusions which may or may not translate into a change in direction in their next console.

Basically, if you think that the primary reason why the Wii was successful was because it was the only "Affordable" console in the mind of the masses you would produce a different system than if you believed that providing a new experience to gamers was what lead Nintendo to dominance.

I'm pretty sure Microsoft won't... They are making profit right now, and are building a brand. They will at least try something.

If a worst case scenario occurs and Sony is in alot of trouble in the next 2 years perhaps they won't continue on.

But i think more realistically if the corporate Sony falls over, sells to another company or drastically cuts back on product ranges the console will be the last thing to go.

Psp first ofcourse.

btw, im not trolling at all. Im realistically analysing the news from the last few days

I would be pretty astonished if Sony did either.  I mean, it would seem like an awfully knee jerk reaction to a problem.  The Playstation brand has a built in fanbase and still holds weight, even though some would say otherwise.  Yes, Sony has significant financial difficulties, but isn't Playstation one of the closest things they have to a ubiqitous brand?