An Analyst working for Wedbush Morgan Securities Michael Pachter claims that the current generation of game consoles could constitute the last "console cycle" as we know it.

In his 210-page report with the catchy title "Money for Nothing: How Ancillary Revenues Can Extend the Console Cycle" [why didn't Dire Straits write that line? ed.] Pachter said the days of a long running war between three consoles will be over soon. He said that each hardware maker will be looking to upgrade their machines incrementally over the next five years, not introduce brand new pieces of hardware.

Pachter said that it is a "commonly held misperception that consoles can only support software sales growth for a five-year period, and that current generation console software sales will drop dramatically in 2010." He said that the Xbox 360 and PlayStation 3 still have massive room for growth over the next few years. Pachter said that more than half of Wii households are nontraditional, meaning that they would not have bought a console but for the novelty of Wii. This means that Nintendo never crowded Sony and Microsoft out of the market and there is still lots of room for sales of traditional consoles.

Pachter says he expects the Wii to dominate in sales for the next two years. By the time that Wii's juice finally runs out and a more powerful piece of hardware becomes necessary. He predicts there will be a "Wii Plus" with graphics more on par with 360 and PS3, to make it easier for game publishers to port games between all three consoles. If Nintendo pull finger and can offer such a device by year-end 2010, it will be in a position to seriously damage Sony's chances of a comeback.

Pachter also "would not be surprised" to see a "slim PS3 redesign" at the end of this year, and the rumored upgraded Xbox 360 in 2010 with a terabyte of storage. He said that the entire scenario is too finely balanced and all it would do is take a disruptive idea come from an outside company, it could change the ways that Sony, Microsoft, and Nintendo do business, perhaps forcing them to introduce new hardware.