IMO they went AMD because that was the only real option left. PPC was dead by then outside of big IBM servers and ARM was just getting into low-end x86 performance levels. If PPC was still getting improved in the embedded space I think they might have went that way for backwards compatibility reasons.
IBM put in a bid for PS4 (based on Power7 IIRC) but it wasn't selected. I think the convenience of getting everything from AMD helped them take over consoles.