Okay, we've had 2.5 successful launches and are officially knee-deep in the current generation. None of the consoles has even begun to reach its full potential. So, what better time to start talking about the next generation? A few thoughts:
Nintendo to get in early
Why not? Nintendo's always been fashionbly late to the party, but this time things are different. Nintendo has created a business model closer to their amazing portable gaming division in which they're reaping profits off of hardware sales straight from launch (and earning good press for their affordability to boot!) and making bank on relatively cheap games. Their need to milk a generation's console for all its worth has been diminished.
In 2010 Nintendo can upgrade their hardware to PS3/360 levels, add HD content and maybe even a player, perfect and expand their motion sensitive technology, add other new innovations to multiply the immersion experience (and perhaps adding a standard controller now that the Wiimote has become accepted), and generally laugh all the way to the bank.
Microsoft Willing to Wait
Microsoft has been watching its gaming division hemmorage money for the better part of a decade now. They've finally broken through and have earned themselves a huge chunk of the gaming pie. In a few years the 360 should finally begin making them some good money. Given that the power of their console likely won't be fully realized for years to come, they will be happy to earn back some of that money while earning the title of king of traditional consoles. Given this, and the huge cost of launching a new monster machine, they'll want to wait as long as possible before starting all over again.
Ultimately, their decision may well come down to:
Sony...huh
Sony's in a bad spot. The PS3 is a dud destined to come in a distant 3rd. It's so expensive that it makes the 360 look like a bargain and, despite legendary production woes, PS3s litter the aisles of electronics retailers across the country a scant few months after launch. Unfortunately for them, they've also sunk a lot of money into the project along with their hopes pushing Blu-Ray onto the world. Even if they are losing a lot of money, it will be years before they're willing to phase it out. What then? Well, the obvious answer is a PS4, but when?
One thing that this generation has proved is that it takes a lot of money to significantly upgrade hardware. That trend isn't likely to change. Sony and Microsoft will either have to wait longer this time around before launching a new round of console wars, sell their new consoles at a huge loss, or pass some of the cost of inflation on to the consumer (which Sony has discovered, will not work).
Sony's entire business model revolves around their dominating the marketplace because they simply do not have the in-house studios to keep a console profitable without being the first choice for developers. I see them launching another console as early as 2010, 2011 at the latest. Such a gambit may not even work. A world not ready for a new round of amazing hardware (that won't even be much of an improvement) could prove even less successful than the PS3.
However, Microsoft will be ready to roll out a next-gen system of their own if Sony succeeds. If they don't, look for them to wait until 2013-14 to officially begin another new generation followed by Nintendo a year later.