It took them a while, but Sony have just announced the PlayStation 4 - and it's based on AMD's latest low-power Fusion architecture, the Jaguar core.  Jaguar features both minor improvements - a longer pipeline to allow higher clock speeds, a larger, shared level 2 cache, and instruction improvements for higher IPC - and major ones - four cores, up from two, and a 128-bit floating point unit to replace the 64-bit unit in Bobcat, for at least twice the integer performance and four times the floating point performance.  Jaguar (in the form of the Kabini family of chips) is built at 28nm, a full node advance on the 40nm process used for the Bobcat-based Brazos chips, so it does all that while using less power than its predecessor.

Microsoft haven't officially announced their Nextbox yet, but the information that's leaked out says that they're basing their next system on the Jaguar too.  Meaning that of the three big game consoles in this generation, AMD are supplying CPUs for two and graphics for all three.*

And here it gets interesting.  AMD's fastest existing Fusion processors have 4 CPU cores and 384 graphics shaders.  Jaguar too is designed as a module with 4 CPU cores.  But the PlayStation 4 will have 8 cores - two quad-core modules - probably running at around 2GHz, and 1152 shaders - three times the current largest Fusion chip - at 800MHz.  Plus it will ship with 8GB of 5.5GHz GDDR5 memory on a 256-bit bus, avoiding the major pitfall of integrated graphics, lack of memory bandwidth.  It should run faster than a Radeon 7850.

The Xbox 720 (if that's what it's to be called) has a slightly different configuration: Again 8 CPU cores, 768 shaders (so two thirds of the PS4), and 8GB of standard DDR3 memory, but with 32MB of embedded memory for the graphics frame buffer.  That's similar to the Xbox 360 which has 10MB of embedded RAM and the PlayStation 2, which had 2MB.

Both approaches are entirely workable.  The PS4 has faster access to general memory; the 720 will probably have faster access to the frame buffer, while keeping costs down for main memory.  For a general-purpose system the 720 chip would allow 32GB (or maybe more) of cheap RAM coupled with integrated graphics at least twice as fast as anything available today.

Where it gets interesting is comparing the development process for this generation of consoles to the previous generation.  Sony, with Toshiba and IBM, spent about $2 billion developing the Cell chip that powers the PlayStation 3.  For the PlayStation 4, they just called up AMD and asked for an a-la-carte chip based entirely on existing designs.

And AMD has said they're open to providing the same service to other customers.  While there's still huge barriers to entry for new consoles - first and foremost, getting attention from developers - 95% of the NRE (non-recoverable engineering) expenses have just evaporated, and the market is wide open for innovation.