I've got mixed feelings about this.
On the one hand, there's the almost obligatory 'get a PC' response to the idea of an upgradeable console. But having said that, as easy as PC upgrading is, it's still just complex enough to put some people off to the point that they would rather buy a whole new device. So if Microsoft or someone else could make the upgrade process stupidly easy, they might have cornered a new market.
However, it feels like what he has identified as the problem is more geared towards a) lack of backwards compatibility and b) the 7 year hardware cycle. I'm hard-pressed to imagine how after 7 years you wouldn't just want to upgrade the whole device, as just about every component will be out of date. As for backwards compatibility, surely that's more of an OS architecture issue?
What makes the most sense to me is making a console that has an easily upgradeable GPU and expandable storage. Then you can run your standard hardware cycle with a modest processor and RAM specs, but keep getting some performance improvements in the meanwhile.