Hey everyone, new to these forums, but saw this discussion, and thought I could add some insight. I was doing research on the next gen AMD GPUs coming out soon, and the article explained that both MS and Sony are looking to use these GPUs in their next systems. AMD will be launching the 8870 and 8850 first before their top of the line 8970 and 8950 GPUs at $269 and $199 respectively. The 8870 will be on par with Nvidia's GTX 680 and the 8850 will match the GTX 670. Since the 7870 is = to the GTX 580 and the 7850 is = to the GTX 570 this sounds reasonable.
MS, and ESPECIALLY Sony, know how much it sucks losing money everytime you sell a console, so I guarantee you they will be cost nutral day one. Most likely the systems will ship at $350 (small storage,) and $399 (More storage,) to keep prices where people will pay. With all of this in mind using the 8850 GPU is extremely viable. I'd assume they'd both pair the GPU with a budget Quad Core CPU (Either from Intel or AMD,) to save money, and hit their goal of NOT losing money.
How does this compare to the Wii U? Well lets break things down. The Xbox 360 GPU is equal to the ATi 3850 in performance. The Wii U is supposedly slightly faster... so lets assume ATi 3870 performance levels except with modern day sharder models. In a modern day GPU this would be about as fast as the AMD 6670 (Technically it's not even that fast, but due to the 6670's memory limitations it'd be close... ish.) The short and skinny of it is you can see the differences looking at charts comparing the GTX 670 to the AMD 6670 (Even the 7750 if you want, but the Wii U is NO WHERE near that level of performance.) Expect the next MS and Sony consoles to command at least 4x the GPU horsepower of the Wii U.
This doesn't mean the Wii U is totally boned however. With the massive install base of the 360 and PS3 there's NO WAY Publishers are going to drop those consoles anytime soon. Call of Duty will not release only on a new console. They'd lose millions in sales, and billions of dollars, until the next gen install base is high enough then they'll drop previous systems. Also, next gen consoles want to deliver 1080P gaming. Lets face it almost NO 360 or PS3 games actually run at 1080P resolution. Most games run at 1024x576 or 1280x720, and usually at ONLY 30 Frames Per Second. The next gen will focus on making sure all games run at actual 1080P Res, and 60 Frames Per Second (Basically what PC gamers enjoy today.) This means the Wii U should be able to run those same games, but at lower resolutions 576P or 720P, and lower framerate 30FPS. The only issue with the Wii U is the lack of RAM. The Nextbox and PS4 will probably opt for DDR3 RAM due to the cheap price (keeps them in budget,) and it makes NO SENSE at all not to toss in 8GB as it costs consumers (you and I,) about $30 now, and they'll get it even cheaper. Post Windows 8 all MS OS's will be 64bit only, and the rest or the world will have to deal with it, so most likely the next consoles will be x64.
Obviously all of this is conjecture at this point, but all signs point to this direction. It makes sense for the publishers, as all systems are viable, just MS and Sony will produce a better looking/running game.