It's marketing. Devices that will compete against consoles aren't going to be < 1W. Krait and Adreno on HPM will scale to sub-10W when the frequency is increased. Similar to ARM's plans for A15, this will start encroaching onto console and laptops.
While true, the Wii kinda taught us that you can be an order of magnitude less powerful processing wise and still come out ahead in sales.
10W is nowhere close to what a serious higher end console will use. I'm not really questioning the CPU designs here - those have the potential to scale quite a bit - but these devices will always be limited by the one that has the cooling surface area, fan(s), and heavier duty power supply.
Yes, you can make sales and even be the market leader with something quite underpowered. This does not equate to replacing everything else, which is Qualcomm's language. I think the current climate of consoles has reinforced the notion that there are different gamer demographics and neither XBox 360/PS3 nor Wii is coming close to addressing them all.
As I look at it, it's the console model that's losing out right now. In fact, I see more and more titles being released as ~$5-$10 games that are bought and downloaded from XBox Live or PSN. Yes, there will always be a market for games like LA Noire but the vast majority of the market just wants Wii Sports.
Again, there's room for both, and just because one is growing doesn't mean it's going to eventually take over the other completely. I strongly disagree that the "vast majority" just want Wii Sports, or else the sales ratios between the three systems wouldn't be what they are. And if there were only one higher end console instead of being split between Sony and MS the story could be even different; combined, the sales of the two exceed Wii's.
Of course, even Wii Sports level of development isn't really sustainable on $5-10 a game, which is why games costing that much are on a MUCH smaller budget or are ports. The XBLA/PSN libraries are actually pretty small compared to the disc games, a better comparison would be games on iOS and Android.
While it's true that a <1W SoC will never be able to match contemporary console hw, mobile devices have much less resolution, iterate much faster, are often subsidized and have much cheaper games - which indirectly implies simpler assets.
The resolution argument is moot when talking about an otherwise mobile device that's supposed to out-perform consoles when being connected to a TV. The quick iteration as well as much greater market segmentation is itself an impediment towards development actually pushing into the higher end of these device's capabilities. The cheaper expected cost and much simpler assets is also hardly an argument for how games running on Snapdragon-powered tablets are supposed to look better than console games.
Re-subsidy, are tablets even being subsidized at all right now? When it comes to data plans buyers will get one subsidy buy-in against it and that's it. In most cases that'll probably be their phone, and the phone will ostensibly be less powerful than the high-end tablets in the GPU department. If you can't subsidize the tablets they stay $500+ for the high end which will hopefully not be the running cost for new consoles (which instead are subsidized).
I really don't think that phones and tablets are threatening home consoles (not gaming handhelds) as much as some say they are. Yes, they'll probably continue to take some share, but I see that plateauing. Most of their sales have been due to growing a new market more than destroying that particular one.