So I was just getting into the shower thinking about where PC gaming could end up in the future, particularly given the current pre-eminence of the various consoles. This gives a good analysis of what has happened over the past couple of decade or two, but I wanted to indulge in some wild speculation.
The PC has two problems:
The hardware
Damn it, we're so cutting edge it hurts. Our multiple gigabytes of RAM laugh at PS3s and Xboxes alongside all the pixel shader DirectX 10/11 fun. Of course, fall off that edge and you're in a wasteland where you hardware is condemned to old games and Microsoft Office.
And the basic hardware isn't all that. I like keyboard and mouse as a default control system, but some games really do call out for a controller/joystick/steering wheel. PCs just aren't quite as flexible without spending extra cash on controllers you'll use for 1 hour out of every 10 you play on it for.
The image
Xbox. PlayStation. Wii.
Personal Computer.
The first three suggest either mystery or entertainment. The PC suggests a guy in a suit with a calculator. PCs have an image problem - For PC gamers they're an awesome piece of gaming technology, for the rest of the world they're something they do work on and suffer with in an office - Very few people sit down at an Xbox as part of their job. Some sexing up would be nice...or just plain necessary.
PCs also don't tend to 'scale' very well. You want to play with other people you'll either have to be in separate rooms or hotseat (which only works with a handful of games at the best of times), which is usually in a room that is ill-designed for more than two people. The console often gets pride of place on the home TV while the PC lives shamefully in a bedroom somewhere. A console will have more than one controller, A PC...won't.
The conclusion
How can the PC survive? Well, taking over would be a good start - Blitzkrieg those tacky imposters out from under the TV. The input devices are going to have to change, the experience is going to have to be less 'personal' and more 'social' when it needs to be (without plying it with alcohol). I suspicious of those media centres you see Microsoft trying to come up with, but perhaps with a bit of that, a hint of console control and good old fashioned mouse n' keyboard the PC can retake centre stage and show everyone what good quality gaming is all about.
The thorny issue of the 'bleeding edge' remains, but if the right hardware is selected (preferably by the manufacturers!) the lifespan can easily be that of the average console. Then all they'd have to do is solve the degradation of performance Windows suffers over time...and not even my crystal ball know hows that can be solved...