First off, all the reports of an IBM processor with R700 ati graphics is a guess made by a french site and passed off by IGN and everyone else as FACT,
the site net01 was what CVG sited as fact but the actual quotes were guesses, and now I'll base my speculation on a few facts we do know.
1. AMD last year leaked that they were working on a
CPU for a console that would be released fall 2012, they would not confirm which console that is, but Microsoft just started hiring for a new hardware team, so Xbox(3) will not come to retail for atleast 2 more years and will miss this window entirely, PS4 is likely futher out, so lets safely assume it is the next Nintendo console, Project Cafe will likely have an AMD CPU and GPU as Nintendo has stuck with art-x/ati/amd for the past 2 generations.
2. Nintendo will try to save money and look for the most efficent hardware, thus Project Cafe is going to run an APU still in developement looking to release fall of next year by AMD.
3. AMD's upcoming release schedule:
http://pinoytutorial.com/techtorial/amd-trinity-krishna-wichita-and-komodo-specs-and-release-date-on-2012/These three things point to AMD's Trinity APU coming out fall of next year, the time frame is right and AMD has all but confirmed that they will be building the CPU and we know they are likely to be the GPU as well.
What sort of power can we expect?: Trinity is part of Llano's next gen hardware, which means it should meet or exceed Llano's CPU power and Graphics that are currently faster then an Intel i7 as gathered from AMD's announcement video easily found on youtube.)
Specs of the Trinity APU:Processor size: 32nm
CPU: Bulldozer 2 or 4 core
GPU: 6790 @400SP (Which is the successor to the 5830, this is a specially designed chip to fit on the 32nm processor as the current 6000 series is designed on 40nm, the gpu will likely be a 7000 series varient of this same card because of it's 28nm design, so a 7770 that simply doesn't exist yet.)
Ram: 1GB GDDR5 and atleast (probably more but safe to assume for backwards compatiblity) 88mb t1 speed ram for entire system.
Storage: 16GB flash storage with SD card slot. (This would be for DLC and VC, disc games will not be installed to it. This is also an optimistic assetment.)
What this means: This is not a super high powered machine, to be perfectly honest the R700 guess is valid with this speculation as even though the generation is wrong, the performance will only slightly increase from this, though it will be DX11 and offer a lot of neat tricks like Tessilazation.
This is a closed system, which means it will look light years ahead of 360/ps3 and thats because spec wise, the gpu really is far more advanced then those systems, if you ran windows7 on a 360 and installed mass effect, you wouldn't be able to play it, same with a ps3, the systems are powerful because they are not having to run a huge boggled down OS in the background.
VS a 2014 parts? (the PS4/Xbox3): GPU reviewers have been coming to the same conclusion for a long time now, 1080p can only give a GPU so much taxing, if you look at thermals and wattage requirements, the difference between all 3 systems will fit inside Gamecube vs Wii as far as graphics.
Wii2 should be able to play BF3 PC version @ 60fps @ 1080p without lag thanks to not having an OS in the background. Same with Crysis and the next elder Scrolls, which means it should be able to get those multi titled games that the wii missed out on this generation.