i think it went something like microsoft and nintendo were going to team up to blow sony out of the water in the next round of the console wars. microsoft makes the best/most powerful/heaviest console and nintendo owns the licenses to some of the biggest franchises so combining their forces would be the only way they could compete against sony. when it was announced that ati was going to be powering both company's next consoles, it only fueled the rumor.
before i get bushwacked, i didn't say i think the xbox is the most powerful console, i just said that's what others were saying.