They would be shooting themselves on the foot: Nintendo made that same mistake with the N64, which had better graphics than the PSX but not enough to be nextgen. Besides the gap between the "X720" and the PS4 would be smaller than between the latter and the X360 since you can only go so far without resorting to really expensive components, and msft shareholders are still asking for the +$4 billions spent on the first Xbox
There is a new CECH-3000 model shipping to retailers soon: http://www.andriasang.com/e/blog/2011/06/20/new_ps3_model/ http://www.jp.playstation.com/ps3/hardware/cech3000b.html 3000 is a major model change. Previous models were in the 2000s. They say the pricing of the CECH-3000 is the same, but the model has a 320GB drive. There has been talk of Sony trying to incorporate the RSX and CELL into one package. Due to the different manufacturing processes, this would be hard to achieve, but Sony are masters at component reduction (whether you love or hate them for it). If we are to see another big shrink in motherboard size and case size, they would presumably have to go that next step. The power change of the 3000 series is not massive suggesting that it is not an incorporation of the two, but 30W is a decent amount.
"The new CECH-3000 series PS3 requires HDMI only for BD movie output in HD, in compliance with AACS standards," Sony says. "PS3 continues to support component output for HD gaming and streaming content." More here: http://www.eurogamer.net/articles/digitalfoundry-new-ps3s-drop-hd-component-support
Blu-ray on the older systems will output 1080i over component. Apparently this change is true for all new Blu-ray systems.
