They need a huge gap between console generations in order to offset the huge losses they suffer selling the damn things. You can't have a new console every 5 years because it would destroy the business case for having them, Sony had a job remaining solvent over the PS3.
There is no way a console worth $500 is going to compete with a graphics card which costs the same money. Can't and won't happen. Even with your A10 Jaguar 8 core behemoth and its 8GB of RAM which all the fanbois thought was ace. End of the day it all boils down to the number of transistors in that GPU and how fast the fcker clocks.