I subscribe to the "Two Systems - Fail" Rule for consoles. Take a look:
Good System - Great System - Fail - Good System - Great System - Fail
NES - SNES - N64 - GameCube - Wii - WiiU
I am one of the few people who hated the N64 (yes, I owned it, with my own money). The cartridge format, the late appearance following the PS1, the stupidly high price of both the console and it's game (again, the cartridge format), is what fueled a loss of market share that Nintendo had built up over a decade. While it has its stand out games (Mario64, StarFox64 and, for people other than myself, GoldenEye... bleh), it also had it's share of crapware (Superman64 anyone?) and cost just too much to really invest in it as a gamer on their own dollar. Also, let's not talk about that godawful controller.
So, where do we go? I am not sure. According to the rule, the WiiU could be the great fail. There's no question that the Gamecube was a step in the right direction and the Wii, whatever you think of it, brought a huge number of new and old console gamers to the market again. However, Nintendo continues to stagnate. What was the last really novel new IP? How many more Zelda games can YOU stand? I don't think I can stomach another Mario, Zelda, or Metroid. They were all really amazing in their time, but, for a thirty something gamer like me, that time long since passed. I am done with Nintendo unless they can bring back some magic. I think maybe they should focus on what really made the Wii work (ugh), and that's their focus on casual, accessible games that anybody can jump into and have fun with. If the WiiU can get my daughter to play console games like the Wii did, and make it family group-play friendly, I'd have to consider it.
Also, a new stable of good IPs would help.
Master System - Genesis - Saturn - DreamCast (If you're really a Saturn fan, try MS - Genesis - CD/32x - Saturn - Dreamcast)
What? The Saturn, a fail? Yeah, unfortunately. It was a good system, but it came to market very early and VERY silently. In fact, as a gamer, the existence of the Saturn was a surprise to me. I was still entrenched in the SNES market and dabbling in PC at the time, so the anticipation of the PS lead me to learn of the Saturn, after the fact. Still, I know it wasn't, by any stretch a BAD system. However, Sega's goodwill built up on the Genesis and a strong stable of games was already heavily squandered by it's Genesis add ons, the CD and 32x, which were both atrocious. If you're really lover of old Sega, than you can consider those the "fail" and that pushes the Dreamcast from good to great. It really would have been too, if Sega's hardware and support hadn't finally thrown in the towel shortly into its generation.
Playstation - PS2 - PS3 -PS4
So, the Playstation was a vital system for 90's console gaming. Why? It hadn't squandered years of hardware goodwill like Sega and it didn't stick to the overpriced, under-delivering cartridge format like Nintendo. It was, for a lot of gamers, the first CD based console (which didn't suck... looking at you Sega CD). It also ended Nintendo's romance with Squaresoft, leading to FFVII, FFVIII, FFIV and Parasite Eve all on Playstation exclusively. They sold a ton of consoles on their own. The PS2 simply built on the existing dominance that the PS1 had grown and added in better graphics, a new generation of great games and backwards compatibility.
Thus the PS3 is a fail? Wuh? Yeah, I said it. The market dominance of Playstation ended at the 3, which is why it is a fail. They were late to the table, though only because the Xbox360 got kicked out of the door as an Xbox v1.5, but was oddly successful in doing so. The online interface for the 3 was originally far behind that of the 360. The controllers hadn't innovated since 1997 and was no longer the form fitting choice for a lot of players. Oh, and there was the initial release price of at least $300, which was way above the standard price for the day and above the market-acceptable price (as proven by the old 3D0). Also, there were consistent dev complaints of the system being obtuse to develop for, despite being superior hardware. Not a bad system, but not the powerhouse that was the PS2.
So, where to go for the Playstation? Exclusive games that AREN'T about Nathan "Douchnozzle" Drake and his staple of idiot sidekicks. The PS3 had two exclusives that weren't from Naughty Dog and almost rose to the point of late system sellers: Demon's Souls (loved it) and Dragon's Crown (loved it). Let's also remember Heavy Rain (hated it) and The Last of Us (haven't played it). I'm not even mentioning Little Big Planet (great). This type of new IP is what the Playstation crew needs to focus on. They also need to settle down their PSHome into something less cumbersome and obtuse and give a little more individuality to their online feature, a la Xbox Live's Mii-esque avatars and accessibility.
Xbox - Xbox360 - Xbone
I'm calling it now. The Xbone, while not a bad system per se, is going to kick Microsoft's Xbox division in the wallet. Long term sales will fall below expectations and losses will be posted. High price tags, integrated Kinect with an already badly developed reputation for spying on your living room (real or perceived, I know more than a couple gamers who still think this is the case and are not happy about it, and not researching it further), and no real "come play me now" games that are drawing in new players means that Xbox has hit it's first hubris speedbump. It's still too early to tell, but we'll have to see. For now, I think that if the Xbox wants to stay relevant, it needs to set itself apart from the PS4 and Wii while building on what Microsoft does well: PC stuff. If the Xbox can make itself into a relevant console with PC-esque features, like a good M+K platform and integration to existing Windows games, I think it might pull off an upset. However, I think we already know that isn't the case, with the 720p resolution and the fact that it has no existing way to access existing downloaded PC games... and Steam is taking the initiative on that.
Steam Machine
We'll see. I reserve all judgement, but I have a keen interest in this one. Right now, I have my (pretty powerful) travel laptop set up on my living TV to play some games there. If the Steam Machine, for the right price, can access my Steam library and give me a good console-esque experience while using my PC games, on my 1080p screen, with my USB peripherals where appropriate, it might just be my only choice this generation.
In Conclusion
I don't know about this generation. As someone who got into games on consoles (Atari and NES) and migrated to PC (mid to late 90's) and then back to Consoles (current gen, aka 360/Wii/PS3) and then back to PC again, I think the current console future is pretty bland and bleak. The consoles really need to focus on setting themselves apart from the PC market, which Steam has almost single-handedly pulled back from the brink and brought now to almost market dominance (how many of you have NOT been watching the current Steam Winter Sale every 8 hours or so?). I think Nintendo is in the best position to do so, due to it's ongoing casual-friendly reputation and stable of beloved exclusives, however, I think it also needs to innovate and create new IPs to draw in the long-term gamers. The PS4 and Xbox? I am not sure. I think they are about to go into the hardest period they've had to endure, and I am not entirely sure either of them won't be going the way of Sega hardware by the end of this generation.