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The release of the PS2 brought forward the ability to use the gaming console to play PS2 Games, DVD, and even previous generations of consoles games. It also doubles graphics output in the second generation.
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Release of Microsoft's first Game Console in 2001. It saw double the GPU output and almost triple the computing capabilities. (3x as high MHz in CPU than PS1)
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Microsoft launched their follow-up to the original Xbox seeing major improvements to the previous design. With an improvement to CPU leaning more toward actual computer processing abilities compared to a stand alone console. When paired with Internet/Wifi advancements during this time more people will start to connect with each other using online multiplayers.
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As a huge upgrade to the previous PS2, the new PS3 console was able to run Blu-Ray DVD's. It had decreased CPU compared to the Xbox 360 but saw major improvements to the graphics ability.
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Nintendo releases it's contender in the modern 'Console War' with its drop of the Wii. Although the CPU, GPU, storage, and RAM are all incomparable to the previous releases the Wii utilized motion to play games and even had the ability to run games from Nintendo's consoles of previous decades.