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The thought behind it is similar to the joining of forces between Suzuki and Kawasaki Motorcycles. Three years ago, if you stated that they would join forces, you would be laughed out of the building. Now, look what has happened. Neither company standing alone could compete with Honda, and both were floundering in their efforts to gain any significant ground.
Well you see they are both Japanese companies whereas Microsoft is American while Nintendo has always been traditionally a Japanese company at heart that grew from a small entertainment company doing card business into what people know today.Rare may have got sold but Nintendo is always considered a valueble asset for tha Japanese when it comes to console gaming business.Imagine all those efforts put into building up Nintendo throughout those many years being just taken away from a foreign company just for money?
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And this talk of M$ is "teh greedy M$$ suxxorzz!!111!" is crap. Basically, all issues would be worked out in the contract negotiations. I can see two differing consoles with each having their own "bells and whistles", but having compatibility between them. Revenue sharing, licensing, etc. would be worked out prior.
Look what happened to Nvidia today?Rare just got swallowed by MS..Sega almost got tricked too.So what can Microsoft contribute if they were to teamed up with Nintendo?Cash?Installed base?Technology?Sony can do that too as well as a matter of fact even better in some of these areas.
But think of it that way if Nintendo was to sell out to an American bully by teaming up with MS just for $$ sake, wonder what will happen with the current software community such as SquareEnix,Konami,Capcom,Atlus,SNK react?The fact that why the FF series,DragonQuest did not make it on the Xbox could answer that.
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also have a 6-year old daughter. Now, when I only had one console, the kids' choice for games was crap. Now, had I had a console that could offer me games such as Mario, Pikmin, etc, as well as play Halo, Knights of the Old Republic, etc.... the console choice for the older gamer (in my mind) would be a "no-brainer".
Well I think you don't quite understand what most Asian console gamers want.You may want adult oriented real FPS,real action gaming and may think adventure games like MArio,Zelda,Pikmin,Pokemon,Digimon,Akira Toriyama's works i.e

ragonball,Hayoki Miyazaki's anime suck but do you know that many Asian youngsters are crazy about them?Thats where the money are and if you think that Nintendo should cater to adults like you,you're wrong because the real market consoles are targeted today is not your group type.They are still aimed at kids.The type of games you'll probably like which are adult/mature type oriented can be found on pcs.So why do you want Nintendo to support MS?Wouldn't the Xbox which is basically designed more towards the PC architecture be more appropriate for you?In this context as well so can Sony cater for the older group as well.They have EA games at their side.