Some notes:
-Is Capps sure about Warhead as canceled to consoles? As long as I known, the expansion developed by Crytek Budapest was never in the console market radar.
-The dominance of UE3 as third partie middleware in the current console generation is not in question (more than 90 games licensed over this engine), but aside a few ones (Gears, Mass Effects, Mirror's Edge, Batman AA... ) most of them looks dull and generic, with limited success and a small impact.
-Some developers had now efficient multi-platform engines capable to compete with UE3, sometimes even with advantage. Not only the incoming CryEngine 3 and id Tech 5, but currently also the DICE's Frostbite Engine, the Capcom's MT Framework or the A4 Engine.
-I think that Epic will struggle to achieve the same degree of success in the next generation due his main advantage in this current one was that they were ready before the start, and now more developers are at equal terms in order to face the next generation.
-Larrabee was a fiasco.
-Epic is currently in a weird (and weak) position in the PC market. UT franchise -even if I love the sage- is dead. After Unreal II The Awakening in PC, Ureal Championship 2 in Xbox and UT III as multi the franchise popularity is in his lowest state. At this moment they have no stuff to compete in mp against titans as the CODs or BF games, nor in the sp shooters. In fact, their best option cames from PCF Bulletstorm.
It looks like, in PC, Epic is currently a colossus with clay toes: his UE3 is widely used, but they lack in powerful franchises.