Nuts. Obviously everything doesn't revolve around the gaming console market, but big profits and dollars sure seem to make a lot of sense. When the next gen consoles are able to make a decent profit on the hardware, and sell millions of games that will mean there's little to no reason to release a new or upgraded system. If another company does decide to jump in then the onus is on them to establish themselves while spending billions of dollars doing so. If both Sony or MS see that these new competitors aren't making headway into the console market then there's little reason to release a newer console. You act as if any old company can come in and release something and it will change the entire dynamic of the industry. The costs of reality say otherwise.
First off, I think these machines will be profitable almost immediately, it appears they will be more easily cost reduced, and also more scaleable so complete ground up re-designs aren't necessary.
With regards to competitors coming in, they already have. $99 Roku boxes play angry birds, $99 apple TVs can stream Infinity Blade 2 to your TV. Where will these devices be in two to three years? These things already exist. Its a bit of why BluRay will never be what DVD was, even though BR is superior, streaming is damn close enough.
Gabe newell:
"The threat right now is that Apple has gained a huge amount of market share, and has a relatively obvious pathway towards entering the living room with their platform," Newell said. "I think that there’s a scenario where we see sort of a dumbed down living room platform emerging."
In regards to Microsoft and Sony, Newell claimed that "Apple rolls the console guys really easily. The question is, can we make enough progress in the PC space to establish ourselves there, and also figure out better ways of addressing mobile before Apple takes over the living room?”