Well, it does somehow. I mean, PS4 and 720 haven't even been announced yet (and are therefore unknown to the general public) and sales are still declining. This has nothing to do with the end of the hardware cycle but with the oversaturation of the market. The 720 should have launched already last year. Just look at the hardware and software sales 09/10 was the all time high this gen and it has been going down ever since. People are getting bored.
Sales are declining?
Units per Million...
2006---
360: 8.9 (10.4)
ps3: 1.7 (1.7)
2007---
360: 7.3 (17.7)
ps3: 8.7 (10.4)
2008---
360: 10.8 (28.5)
ps3: 10.7 (21.1)
2009---
360: 10.2 (38.7)
ps3: 12.4 (33.5)
2010---
360: 12.1 (50.8)
ps3: 14.4 (47.9)
2011---
360: 14.9 (65.7)
ps3: 14.1 (62)
You say its nothing to do with the hardware cycle rather its over-saturation? They are one in the same. Its part of the hardware cycle.