doublepost, sorry.

Exactly. 

What do you think, how is it possible that every console has its sales peak in its third year, and starts slowing down even before there is a new console? Consoles have a "natural" lyfe-cycle, with this peak at the middle, followed by ~2,5 years of slowing before the next generation comes. 

It is not truly the company that dictates the pace of the generations, but the cusomer. While probably most posters here are hardcore gamers, who would keep gaming forever,  don't forget that most people aren't like this. Even on those so-called hardcore consoles, the relevant majority of the users are playing their games casually, and buy their systems casually. (this is why millions buy their consoles later in the generation. They just don't care that much about gaming). They are getting bored of their games after a few weeks, and they get bored of their consoles after a few years. 

New consoles are made for the same reason why game sequels are made. Gamers will get bored with the old one, know every part of it, so they need some surprise. New games will give that surprise for a few years, but they are limited by the hardware. 

New controllers, more processing power, better online capabilities, etc. are needed to make these new games more interesting, and not just variations of the old ones. 

Great post.

hmmmm ps2, NDS, xbox360 didnt they sell more in the 4th and 5th years then 3rd? i know xbox and DS did. so that 3rd year logic is flawed and inncorrect.

hasn't the PSP come back to life in japan in its what 5th year? thats because of software and lower prices. Keep thinking that new consoles are coming because they are not.. only new revisons.

PS2 was 14% down in 2004, (and 8% up compared to that, in 2005)

Xbox barely lived four years

The PSP was a bit down at its fourth holiday, and it keeps decreasing in its fifth year.

While the DS was indeed 7% up in its fourth year, and suggests a strong fifth year based on the DSi boost, it is more like a proof of my post than anything. Even though technically it is a single console,  it was the new hardware that kept it alive for such a long time.

Also note, that while the PS2 had an amazing longetivity, and the DS seems to follow this pattern, these were the most popular consoles ever. It is natural, that their huge momentum lasted for a bit longer than usual. 

But the PS3 and the xbox 360 both have mediocre sales, that doesn't suggest an unusually long-lasting popularity. 

While it is possible that NATAL and the PurpleWand will really give powerful boosts, but it will only happen with almost literal re-launches, with full support, strong motion control-exclusive lineup, 3rd parties forced to use them, etc. 

But of course, this would have the same effect on us as a new generation. New hardware to buy, no forward compability, totally new style, obselete previous version, etc.

*sighs* Try reading what I said again. I did not say that Sony would be on life-support. I said that merely as a potential situation, hence it's opposed point of skyrocketing sales. I make no case for either, but I refuse to let any fanboy blinders exclude any possible situation.

As for my use of life support, you're also twisting what my intent was. Notice how I say that SONY will still be around, not just the PS3. It's a known fact that the PS3 has been losing money hand over fist. It may be nearing break-even now, but none of us has the numbers to prove one way or the other. But if there is even a penny lost on the sale of a unit, the PS3 remains a short-term liability to the company. And when things were good with the PS2, it was able to prop up the parts of Sony that were doing poorly. However, those parts have not improved, and the red ink that has been generated by the PS3 isn't helping Sony any. Sony MUST find ways to shore up some of these losses. A company that can not stop the red ink will go bankrupt. Now, I'm not saying this will happen to Sony, but as of now, the red is still flowing, and they will need to take action.

Sure, sales of the system are very close to the 360. However, Microsoft's financial situation is better. If they really want to stick around, they can for now, and as things stand, the 360 is showing profit, even if only a small amount. They have stopped the red ink. And the 360 does continue to outsell the PS3, even by small amounts. This will widen the gap, making developers think if a PS3 port will remain feasible. This is the tough spot Sony is in, and truth be told, none of us know exactly how they will come out of it. Will they do a price cut, raising sales, thus potentially raising royalty dollars? Or would that price cut worsen the red, forcing the shareholders to look hard and want to sever the brand? Keep the price the same, and the PS3 will eventually make profit per unit. But will it allow the 360-PS3 margin to grow large enough to push the PS3 to obscurity? And what about the rest of Sony? If they can stop enough red in other divisions, they may be able to look more long-term, and use those divisions to prop up the gaming sector.

Week-to-week sales do not mean the 360 is on life support. What needs to be done is looking at the large picture, and there are too many variables to determine the true future of Sony as things stand. For the record, I do think Sony as a company will pull through. But I do expect to see some parts lost or severely cut back. Will Playstation as a brand be safe or cut? I don't know.

Good points.  I do think this gen will last a little longer than usual, though, mainly driven by the following:

1 - economic downturn - I expect this to add a year or two to the gen as it will likely foster climate of moderation rather than focus on trading up to new versions (I mean in the bigger picture, not the smaller HC who'd trade up to get an even more graphically intense Gears or Metal Gear).  Economic downturns tend to focus people on getting more out of what they have and finding more cost effective ways to extend value of investments they've made.

2 - dramatic cost of development driven by HD consoles - I can easily see another Wii in a normal cycle, but not another big HD jump.  Developers have been complaining a lot about high cost of development for HD consoles, and while the SDKs are good, clearly another power jump would simply worsen the situation

3 - given 1)  and 2) above I expect MS and Sony to instead stick with the current consoles spec, which I'd argue is easily good enough to last and 3 years, and instead expand the systems through extended experiences via Natal and the 'purple wand'.  This plays nicely to the idea of 'adding value' to existing investments.  Instead of buying a whole new console, controllers, etc. you instead buy less expensive extension tech that dramatically changes what you already have.  It also eases pressure on development costs and allows the industry to milk their investments in current tech for longer.

In short, I think Sony and MS are going to go down the route you suggest, reinventing the existing consoles through peripherals and focusing on new gameplay approaches vs hiking graphical power.  I think Wii Fit has been a real interesting peripheral this gen, showing how something that genuinely extends the experience (if properly backed by titles) can effectively change the core console offering and drive additional sales and growth via titles specific to that peripheral.

MS and Sony's challenge is to avoid what I think of as the EyeToy issue - if they let their new control schemes become low interest peripheral with little support, they'll have failed completely in revitilising their consoles mid gen.  But if they get it right, it'll be as though they've launched 360 V2 and PS3 V2 and I'd expect that, coupled with 1) and 2) above, to keep the consoles on the market, viably selling, a lot longer than usual.

Nintendo may come out with a new console, but they have better breathing room to do so.  However, looking at current sales and the success of Wii Fit I wouldn't be surprised if they make a concious effort to extend Wii lifetime also.

From the OP I understand you won't be buying a console within the coming 6 months.
My guess is that when that half year has past, thinks will look different.
Possibly by that time the PS3 slim is finally released or announced ( I seriously expect a big announcement later this year with about PS3slim + GT5 ), firmware updates and the PSN-cloud will put the PS3 features completely on par with XBL ( keep an eye on info about FW 3.00 ), maybe even surpasses it ( theoretically it could ).
On the other hand, MS and Nintendo won't sit still either, so, just decide what to do when the time is there.

The ps3 will be going for many years and they keep getting updates to make them better.Ps3 isnt that far behind xbox360,in fact last year it was outselling it before M$ had a huge marketing boost.Plus ps3 has some very good exsclusives and it hasnt had a price drop yet so i think it will keep going for at least 3 years

dood, even if the PS3 were to get dropped, it still has some pretty great games for a wide audience. Does anybody here still play their dream cast? I would venture a guess that the answer is yes. So, think of it this way, if it drops, you can get more games for less money. I don't believe it will though.