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HylianSwordsman said:
As others have said, the major game changer, literally, in this alternate scenario is that FFVII comes to the N64, possibly as an exclusive. If it's as an exclusive, I don't see Nintendo's dominance ending nearly as quickly. People don't realize just how stupid a blunder Nintendo's insistence on sticking with cartridges was. That was THE moment they screwed themselves on 3rd party support, and they never really recovered. With Gamecube they made the problem worse by insisting on those stupid little disks, then with the Wii they stopped making their consoles powerful, and the Wii U, well...

For sure though, the N64 would have done way, way better if it hadn't stuck with cartridges. It's obviously impossible to know, but I suspect they'd have outsold the SNES, and probably the NES as well. If it only sold better than the SNES I think the PS1 would've just outsold it by 10 or 15 million or so. But if it outsold the NES, I think it would've also outsold the PS1.

I agree with everything you are saying, but sticking with cartridges wasn't actually the dumbest part.  The dumbest part is that Sony was originally their business partner.  Nintendo brought Sony into the gaming space, so that Sony could develop a CD based system for them.  After Sony develops the hardware, the Nintendo Playstation, Nintendo backs out and partners with Phillips instead to make the CD-i (e.g. Wand of Gamelon, etc...).

Nintendo could have actually had Sony as their partner.  Instead they turned Sony into their competitor.  This was the ultimate self-destruct move.  Nintendo wasn't anti-CD or anything.  They just backed out of their original CD system, the Nintendo Playstation, because they got a better deal from Phillips instead.