But disrupting a market completely doesn't happen from the first generations. It took even Apple a few generations to bring down Nokia and RIM, the former leaders of the smartphone market. So I wouldn't worry about this right now.

Plus, there's this trend where people are starting to care less and less about graphics and more about gameplay. That's how disruptions happen. They change the "rules of the game". They don't try to beat the old leaders with the same tricks (graphics performance), but with different ones (better gameplay, more games from indies, free to play, cheaper console etc).

If you think this console needs to be able to "compete" with PS4 and Xbox 360, you're looking at this in a very wrong way. Most of the people that will buy OUYA probably won't even be former Xbox/PS3 customers.

I remember when the iPhone came out, 80% of the people buying them were not "smartphone buyers". They were dumbphone buyers. It took a few years before the people who swore by their Symbian and Blackberry "smartphones" (which had "many more features") started getting interested in iPhones and Android phones.