I have a few remarks about this topic:
- Microsoft have more to gain than Nintendo. They're not making money from the Xbox, and have basically no market in Japan. Nintendo on the other hand, are plodding along, making a healthy profit out of a smaller market share. Sure, 'you have to make a loss to make a profit', but how much loss will it take?
- The companies have huge differences in terms of goals and strategy. In terms of established software and hardcore fans combining with mainstream gamers and recognisable brandname, there are obvious benefits, IN THEORY. Just like communism works, IN THEORY. But to make it work requires the two companies to work together, and I just can't see that happening.
- The Sony/Nintendo partnership would be successful because it has the most popular console combined with the most recognisable characters and games, but in terms of co-operation, I see Sony wearing the pants in that partnership.
- I know Sega has major debts, but I can't understand why Nintendo wouldn't buy them. Sure it's $2 billion, but Nintendo can probably absorb that, integrate the company as a major second party like SK and Retro, and get them to work on some new stuff! Nintendo needs Sega on their side, and their side only. It may not be the best business decision, but it should pay dividends in the long term, by winning back market share.