At this point, it could only be successful in a niche. It could maybe stay profitable within that niche, but it would never become, say, a market leader. The last consoles that banked 100% on pure hardcore gaming were the Dreamcast and the Gamecube. The market has just changed too much.
The reason dedicated handhelds are in trouble is because the mass audience doesn't want to carry around another machine just to play games. They'd rather play games on the machine they already carry around with them to do everything else. I think that eventually that mentality is gonna hit the living room when Apple releases a TV or set top box of some kind that brings iOS to the living room.
At that point people are gonna start to want just one device to do everything instead of having a whole separate box under their TV for playing games. Microsoft at least believes this and wants to get there first. Personally I don't mind.
At the end of the day, game consoles are built to play software on your TV. Arguably, they are the very best machines for doing this. They're much more powerful than set top boxes and Smart TVs, they have more refined user interfaces, and their manufacturers have almost 30 years of experience making them while all the other companies are starting from square one.
My PS3 is probably the best video-playing device I own, and I use it for playing video games at least as much as I play games on it. It's my only Blu-Ray player, it contains the best Netflix app I own, and I watch a fair bit of downloaded movies on it. Hell, I bought it when
300 came out on Blu-Ray because the console didn't have any killer apps yet. The first PS3 "killer app" I bought for it was probably
Planet Earth on Blu-Ray. I've also occasionally used it to display family photos on the big screen. I only wish more video apps would come to PSN. None of that takes away from the system's ability to play games. That said, I do plan to eventually hook a computer up to my TV, which will probably make me stop using my PS3 and Xbox for any non-gaming functions.
The reason Apple and Android suck at this is simply because of the control interface (and price ceiling on the games probably). Sony, Microsoft, and Nintendo don't have that problem. If it's Microsoft devoting 3GB of RAM for the OS, isn't that out of like 8GB or something? If that's true, and the next PlayStation is packing 4GB with just 512MB devoted to the OS, then I can tell you right now that 4GB of memory is PLENTY for playing video games. It may not be the max, but it's still a huge jump from what's available to current gen consoles.
You do know that's exactly what Valve claims Steambox will be and is joining the console competition next gen right? Yeah it'll be successful. No doubt about it.
True, but you'll be able to install Windows and therefore any software you want on that thing.