As interesting as this generation's console war has been and continues to be, I believe the next one will be even more interesting for the following reasons:

1- Sony and Microsoft will have to decide how much importance they give to motion controls. Do they give it the same level of importance as Nintendo did, or will be a secondary thing?

2- Hardware power... difficult decisions here as well. Nintendo could make the biggest leap among the three console makers, giving some gamers an additional big reason to upgrade. Microsoft and Sony will hardly make a big leap graphics-wise, due to hardware and software development cost.

3- Development costs... will they continue to be high (or even higher as Ubisoft's CEO said), or will developers be less ambitious due to the low profits in this generation?

4- Finally... will any of the three surprise with a totally new control system, or will it just be different combinations of classical and motion controls?

So many questions, and a high possibility of a close fight among the three companies. I think we're in for an interesting few years before (rumors, reveals etc) and after the next generation starts.

If Sony and Microsoft don't learn from their mistakes, this could be a repeat of the PS2 generation. There will be a lot of great games, but Nintendo will have a monopoly.

If they do learn from their mistakes, we're looking at what could be the greatest generation of gaming ever. Innovations that are more than just adding shoulder buttons and analog sticks. 3 different companies in incredible competition just to win the hearts and minds of the gamer.

Damn I look forward to it.

The PS2 really did ride the momentum of the PS1. I could see the same thing happening for Nintendo's next console.

Next generation won't be for a while.... I mean... people are saying 2011. Really? Is that why Sony and MS introduced peripherals for their CURRENT console this year for next... Wouldn't they need to introduce the console basically next years E3 effectively killing their motion control hype? Unless NATAL is for the next consol... but MS reassured us that its for all 360's

All the three have good reasons to keep this generation a long one:

- Microsoft and Sony haven't made any profit from their systems yet (though it's fair to say that profit could be a secondary thing for MS)

- Microsoft is launching Natal quite late in the generation as you said.

- Sony is not exactly in the best financial position to start intensive R&D for another generation.

- Nintendo is winning and making a lot of profit from the Wii, there isn't much of a reason to stop that early.

It's hard to say which of the companies will blink first, or when it will happen...

The first company to release their next console will gurantee first or second place next gen,

PS2 launched first they won by a long shot, xbox 360 launched first they took second, You dont know what your talking about.

The next xbox will launch in 2011 and natal will be for both xbox 360 ans xbox 3 and the xbox 360 will slowly be discontinued.

No MS will have a powerful console. They will profit and not forget their hardcore audience. Development cost could decrease or stay the same. Ms will place 2nd or first next gen, most likely 2nd.

1. It goes far beyond that. Its also 'To 3d or not to 3d' from the start of the generation and all the implications that has for the rest of the generation which would also dictate software goals and hardware choices.

One thing you didn't mention is hardware identity. What is a next generation console trying to achieve? Is it still a media centre? Is it a computer system with a different interface? How important will things like education be in leveraging the consoles power? Also what devices will it interlink into?

2. Hardware performance? Perhaps not quite that, but instead thermal performance. I.E. Its not how big the chips are, but how much heat they produce. I think the new metric is as much perf per watt as per mm^2. I think they will target a certain thermal parameter and build the console to fit, be it 100W or 150W or even just 50W.

3. Development costs? Well the jump from this generation assets to the next generation shouldn't be too hard. I think the challege was to jump to this generation and not the jump from this generation. A lot of the assets produced now are likely good enough for the next generation, for example I doubt that Forza 4 will force them to remodel the cars.

4. Probably going back to hardware identity and the question of 3d really.

not true, you forget the dreamcast, that came out a year before the ps2 and that didn't do anything but destroy the hardware portion of sega.