The GPU most likely, the rumoured specs of the new xbox are underwhelming to say the least, it seems as if microsoft are spending most their cash on making kinect 2.0 built in
Yeah, it is the wrong thread, but you have to think here. Nvidia and AMD/ATI have in recent years gone totally bonkers and forgot about power consumption and heat. Modern top of the range GPUs can suck over 700W of power on their own. I think that the original fat model of the PS3 (90nm Cell + 90nm RSX, BD Drive, HDD) sucked 210W or so on average during gameplay, and the new slim model (45nm Cell + 40nm RSX : I think) pulls around 80W or so, so almost 1/3 on a 50% downward node move (CPU + GPU - not really paid attention to whether they have done anything much with the RAM). You simply can't put a top of the range, or even a current mid-range GPU in a box the size of a PS3 fatty without it blowing up, even take into account node shrinks, if you want to launch at the end of 2013. If you want to stay within the 200W target, then you're not going to get 10x an increase in flops or fillrate from the GPU. Not possible.
So, it comes down to what you want to do here. A little quiet box with little or no active cooling, or something that sounds like a hoover? Does Microsoft want to have an iTV like thing that can play XB360 games, or does it want a top of the range console in a huge box with a big loud fan?
Sony have the least to do here, most of the costly bits are done and dusted. They might fiddle with the Cell a bit, but that's just moving things about a little, sticking one of top of the other, that sort of thing, they really don't need to change much about it, maybe swap out the PPE and replace it with an OoO core, better cache, more memory per SPE, etc. Apart from that, it's just choose the very best GPU you can find to give the whole system a power use of around 200W, modify it for FlexIO (needs its bandwidth upping), add some more RAM (XDR2 maybe for Cell), slap the VITA SoC in with the PS3 Southbridge. Job done. They should be able to do this and sell it for less than 300 quid at launch and not make a loss on the hardware. No tablets, no cameras, no bullshit, just a DualShock and the PS4 and a HDMI cable this time.