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Like a pc for instance.
Years ago this wasn't a problem as the bottom spec was say a P75 with 8mb RAM, and the top spec a P166 with 32mb RAM. Not much between them. Today the range is a lot wider - P2 233mhz with 96mb RAM maybe, all the way up to the latest Athlon64 with 2Gb+ RAM and the latest 256mb graphics card. Finding a balance is therefore pretty difficult.
On the other hand, developing for a console allows a uniform approach as you know everyone that has an Xbox/PS2/Gamecube has the same spec. as everyone else. So they can concentrate on getting the most out of that specification and not worry about any lower specifications.
It's also a benefit to the user to own a console. Because developers never try to push a game over their machine's specification (for the above reason), you know that when you buy a game for your console that it will work and it will not tell you to go out and buy additional RAM.
Consoles are therefore better off as they are without being upgradable. As for the Phantom console which *is* apparently upgradable, only buy one if you want to constantly upgrade it a la PC.