It is popular in the gaming press to talk about "console cycles." The idea is that groups of consoles are released at the same time, and move into obsolescence at the same time. The "cycles" thus far are roughly as follows:
1 - Pre-Atari games.
2 - Atari 2600.
3 - Nintendoy Entertainment System (NES)
4 - Super NES / Sega Genesis
5 - Nintendo 64 / Playstation (1) / Sega Saturn
6 - Gamecube / XBOX / Dreamcast / Playstation 2
7 - Wii / XBOX 360 / PS3
Only 3 of these 7 really represented head-to-head competition of games (4,6, & 7). And even within those "cycles" there was a lot of differentiation. Many people don't consider the Wii to be a real competitor with the 360/PS3 for example.
The 360/PS3 are the most similar consoles ever released, and they were absolutely planned as competing products. So comparisons between them are very valid, and can occasionally prove interesting reading. But prior "cycles" were really comprised of very different machines, built for different purposes with different sorts of games.
What is really interesting, to me, is how the "6th cycle" led to a much more unified approach to consoles, and actually caused the "cycle" notion to become a real phenomenon, rather than just an editorial shortcut.
Nintendo made a killing with the NES, and did very well with their SNES despite real market competition. At the time, the prevailing jargon was about "8-bit" vs. "16-bit" machines. Nintendo's next machine was the Nintendo 64 - sort of a "double doubling" from the SNES. Bigger numbers always sound better (that's why we have "XBOX 360" instead of "XBOX 2").
But for some significant time the N64 was NOT the planned next machine. Nintendo and Sony were planning a joint disc-based console. Sony had seen how lucrative the game industry was, and wanted to push their storage medium technology. But at some point Nintendo decided to abandon discs and stick with large, heavy, expensive cartridges. Cartridges have essentially 0 load time, but require a ton of materials to manufacture. Nintendo's dedication to cartridge technology have paid off with their DS line of handhelds (those cartridges are TINY!), but it was a bit of a millstone around the neck of the N64.
But the really interesting thing was that Sony took the work that had been done with Nintendo, and produced their own console - based on CD-ROM technology. This was the PS1.
Neither the N64 nor the PS1 (nor Sega's Saturn) ever really shone as a successful console - mostly because the world was thrilled to get their hands on 3D games - and none of these consoles was really powerful enough to deliver the game quality that was already common in arcades and on home machines. Consoles were frequently snubbed as insignificant secondary gaming devices. It's interesting to note that almost every game was native to just one console, since they had such different capabilities, controllers, and demographics. A few popular PC games would get mediocre ports (Doom, I'm looking at you) - which really made it clear that consoles were second-class citizens.
That hierarchy really changed with the introduction of the Dreamcast, and its launch title Soul Calibur. Then the PS2 launched, with Dead or Alive 2, and people started to shift their opinions about console gaming - suddenly it was the way of the future! Consoles were still inferior to contemporary PCs, but the dedicated hardware allowed developers to really push the systems in ways that a PC could not be pushed, so console releases were often graphically superior.
Consoles in the Limelight?
But now, suddenly, our story shifts. Both the PS2 and the Dreamcast suffered from a serious problem - their best-looking games were dramatically better-looking than the majority of their games. Not only were the graphical qualities very disparate - but the quality-control was lacking, which led to a glut of poor titles released for both systems. A heated (and generally very unfair) argument began to take shape in the burgeoning online communities - which was the true next-gen machine, and which was the pretender? This sort of tough talk had happened before, but never in such a public forum.
And then, something totally unexpected happened - Sega stopped production on the Dreamcast. Suddenly there was only one console on the market! This was totally unlike anything which had ever happened before, and it rocked the game development world seriously. The recent push to develop for consoles instead of PCs was still in effect, and with only one console the field was suddenly all Sony's. But worst of all, the cessation of Dreamcasts seemed to lend credence to the brawling mentality which had become the popular vernacular. All of a sudden the idea of "cycles" of consoles with winners and losers seemed very real. Those ideas had been around for more than a decade, but they had never held such weight before.
The Gamecube and XBOX came out shortly after the PS2 had declared dominance, and both were fine systems. In fact, both were significantly more powerful than the PS2. (I have developed multiple games for all three systems - this statement is based upon my direct experience, and not anything else.) But the PS2 had a knockout under its belt - the first in history! - and nobody was going to bet against the PS2.
Plenty of people put out excellent games for the Gamecube and XBOX, but almost everyone hedged their bets with PS2 games as well. It became customary for every game to be released on the PS2 - in addition to whatever other console it found a home on. With just a handful of exceptions, the PS2 was the only console you needed to own.
This state of affairs was, to many developers, very confusing. More powerful machines always supplanted less powerful machines - right? But suddenly the console race wasn't about power, it was about "winning." And the PS2 had "won" - so no other console was going to get a real shot. Almost every XBOX and Gamecube game from 2001-2005 was simultaneously developed for the PS2. And that meant that very few developers used the extra features of the XBOX or GC - because those features wouldn't appear on the PS2, so they were not cost-effective.
So instead of technology driving the market, console games were hamstrung by the least-powerful console available. It was development for the lowest common denominator.
Let me say now that the PS2 was a fine machine, and had a slew of really excellent games. But its position of dominance was not the result of strategy, or technology, or excellent games - it was just crazy circumstance.
Of course the how doesn't matter too much, because once that ball gets rolling everything becomes a self-fulfilling prophecy. The PS2's dominance meant more games on the PS2, which cemented its position of dominance. Worse, the gaming press (and by extension the game-consuming public) became confident of their use of terms like "winner of this console cycle." - even though the circumstances at that time were anything but typical.
360 and PS3
Microsoft, frustrated at their inability to match Sony's success, took away one single lesson from the PS2 - "first out the gate is first to finish." That is, they ascribed Sony's earth-shattering success to the chronology of console release. Microsoft became obsessed with being the first console to market, and they were. This forced them to really push their console production faster than it could afford to go, so their early consoles were poorly made. This cost Microsoft a great deal of money, and perhaps some market share - but after a year or two they had ironed out their production difficulties. About one year after the 360, the PS3 launched. It was much more stable - Sony had taken the time to make their production pipeline solid - but it was otherwise unremarkable. The PS3 and the XBOX 360 were evenly matched in power. And over the past 4-5 years, they have been pretty evenly matched in sales, as well.
However, that's not at all the full story. Because right after the 360 launched, Nintendo came out with the Wii. Nobody knew exactly what to make of it initially. Some publishers jumped on it (Nintendo is always a pretty safe bet) and some publishers ignored it until they could see how it performed. Nintendo very clearly made the decision to not fight the 360 or PS3 on power. Instead, they decided to go after non-traditional gamers. Expanding the market, rather than fighting over the traditional demographics.
And in short, Nintendo clobbered both other consoles, and clobbered them soundly. The Wii began selling almost 1,000,000 consoles a month, and continued that pace until very recently, when it has finally started to slack off. By comparison, the 360 and PS3 have been selling between 150,000 and 350,000 consoles a month. It's possible they might eventually eclipse the Wii sales, but from 2005-2010, at the very least, the Wii has had almost three times as many consoles sold as either competitor.
Now remember the status of the PS2 - the least powerful console managed to beat the other consoles - holding technology back as a result. Did the Wii repeat this feat?
No. Because despite the overwhelming numbers, nobody in the gaming press was willing to declare the Wii "the winner" the way the PS2 had "won." Everyone was chomping at the bit to see whether the 360 or PS3 would "win" - and they were too invested in their respective camps to acknowledge that the Wii has dominated sales for half a decade. There are lots of blurbs put out like "the best of the next-gen consoles" (which means they are not considering the Wii).
The (Console) Takeaway
So not only are console "cycles" arbitrary re-organizations of history, but declaring a "winner" is apparently an amorphous target as well. The PS2 was the first "winner" - because it outsold its rivals. But the Wii is apparently ineligible, because it doesn't have the graphical horsepower to be counted. The double-standards on display are totally inscrutable to me.
Of course, I wouldn't be happy even if the gaming press decided that the Wii was the clear "winner" of this cycle, because I object to the whole characterization. Games are released continuously, and trying to group them in time is a fuzzy exercise at best. The DS, the Wii, and the PS3 are all very different machines, with different goals. So telling people that they compete with one another is not just incorrect - it's misleading. I can only speculate that Americas demand contests to be broken down into simple two-sided conflicts (see recent political discussions), rather than allowing for a nuanced open field of specialized competitors.
And thus it happened that a series of incidents around the PS2's launch turned the vapid notion of competing cycles into a grim reality, and all of us are now prisoners of it.