I don't really like the way this is written. It seems akin to calling the cellphone "dead" because we now have smartphones which do so much more than just make calls.
iTunes, Netflix, Steam, xBox Live, Playstaion Network, Hulu...these are the new distribution channels, but they all still require a device in the living room, hooked to the TV, to run them. Consoles will become that, if they aren't already.