X-box 360 - I think there are some launch goggles for this one because I think people forget there really wasn't many games at launch (Geometry wars and PGR) and the hardware had red ring for years. By all accounts the 360 was a highly successful product and I think paved the way for Microsoft to start building hardware themselves (Surface).
Okay, all my responses are going to come off as if I'm an Xbox fanboy here, but this is how I honestly see the situation. The first year of the 360 was loaded with games. Call of Duty 2, Oblivion, Hit Man: Blood Money, Dead or Alive 4, Burnout Revenge, GRAW, Dead Rising, Condemned, Saints Row, F.E.A.R., Splinter Cell: Double Agent, Gears of War. There was never a lack of games for the console.
It goes on and on. (PSP, PS Vita, PS2 and Dreamcast)
Dreamcast and PSP actually had very strong first year lineups.
I have some serious concerns for the next X-box for a few reasons.
#1: Exclusive content on their platform is becoming scarce. As much as Nintendo rehashes stuff, Microsoft is more guilty of it because they only have a very small handful of IP that they call their own. How many more Halo games can the market take? A bunch, but is that enough to sustain a platform given Steam and its incursion into the living room.
Halo is huge. Having a small stable of really proven IPs has been a winning formula for Microsoft.
Steam has an unbelievably minimal impact on Halo's future.
#2: X-box Live is overpriced. One of the greatest strengths is really being undercut by Sony/Valve with respect to the actual savings PSN+/Steam users are getting for the same game.
I don't think Xbox Live is overpriced. Do I like paying for it? Nope. But, look at their subscriber base and people voting with their wallet think the service is worth it.
#3: Hardware hesitation. Just like there is now a rule of thumb in the internet to not buy the first gen of Nintendo products (GBA, DS, etc.) and Apple products because of inevitable iteration and significant improvement, the next X-box could be chilled by the fact that owners of X-boxes that have red ringed may have less enthusiasm until the hardware proves itself.
I don't think the Red Ring will have much effect on the next Xbox's sales at all. Microsoft replaced everyone's consoles and the models they've been selling for the past 5 years haven't had a bad failure rate. The majority of 360 owners at this point likely don't even know there was an issue.
Honestly, I have serious doubts that the dedicated gaming console market is viable beyond 3 major players.
I agree, Microsoft, Sony, and Nintendo.