I feel there is room in the market for a new console. There seems to just be a lack of innovative ideas on the forefront right now with games and motion technology, and eventually 3D capabilities. Once one of the big 3 comes out with a new idea that really takes off, the other two will follow in step with their own version. Even 360 and the PS3 have pretty similar games, without much to really show a difference between them. There are a few exclusives, but it's nothing like it was in the 80s and 90s.
I am however hard pressed to even suggest an idea at this point. Perhaps cloud gaming could be the answer... develop a console around the idea, make it wifi with a basic controller and just be able to play your games through a remote server. Put enough basic hardware in the thing to run,and no optical drives to speak of. You wouldn't have to worry about scratched discs, waiting for your game delivery company to ship something out to you, or having to wait to play something until it became available on your queue. The system wouldn't need upgrading or changing, it really would be a plug and play system that would work. Design a company that served the consoles and had dedicated servers for that purpose (instead of using the general servers that PC users could log in to to reduce lag) and set the price tag around $100 or less. Would anyone really say this would be a bad idea? I know you could do the same thing through a PC, but I'm thinking more along the lines of kids who just want to play games and don't really need a huge rig to run all that. I'm aware you could do all that already without a console, but the target audience would be families with a limited access to the family computer and want to keep the kids entertained without everyone fighting over the computer without the need to shell out another $500-$2000 for another computer just for the kids to play games on.