Whoa, just blew my mind. The PC won.
Or, put it the other way : for the last ten years, every PC manufacturer moved to just a normal gaming console, albeit capable of running any generic operating system, and being capable of running generic software quite well. Actually, most modern PCs got all those "custom circuits" (GPUs, sound processing DSPs, vector instructions, etc.) which previously only existed inside those custom chips inside the consoles.
What I thought was not just something of 'generic'ness, but that Sony (and IBM) took a far too ambitious goal, which failed miserably. Their initial though on Cell was that it should become a generic processor which can be used for various home appliances, supercomputing, and possibly other embedded applications. Their intention was to have PS3 to be the initial Cell customer, and find many other customers later to cover the development cost.
However, the problem of the Cell Broadband Processor was that it was too generic to be used for games (since it must also be capable of running HPC or home entertainment applications), while being too difficult to use properly. Thus, they failed to find a customer other than the PS3, and as a result, the sales of PS3 had to cover the development cost of the whole Cell project. The final nail in the coffin was that IBM killed all future Cell projects, probably because they couldn't find any future customers.
In short, Sony and IBM's goal was to create a new "general-purpose" CPU, which failed miserably. The issue wasn't about "generic PC" vs. "custom circuits for gaming" : it was about "generic PC" vs. "a different generic PC".