They tried that once, didn't work out.

if anything sony/MS should team up.
currently this is how it breaks down
360- best controller, best online service, best exclusives, and for some reason multiplatform games are better on 360,heavy american market
PS3- most exclusives, online deals are much better ( PSN+ free games and such), Japanese market, better update/DLC policy.

sony will capture the american market, MS would capture the Japanese market MS would get exclusives sony fanboys would get the exclusives of MS ( quality over quantity)

Thats what I dont like about MS and Sony teaming up. I cant stand the 360 controller or the scheme the games use. IMO the Sony controller is by far the best design. The way the games are controlled seem better on the Playstation as well.....Aside from Capcom games. I would hate to be stuck with that controller. I would however be down for a unification of sorts. The PS has had the ability to do motion based games like Kinect since the PS2. The Kinect is obviously an improvment on that technology. Having Sony hardware with the Kinect peripheral and MS/Nintendos game library would be the ultimate console. It would also help companies overcome development costs because they would only need one version of the game. This I feel would be the only real win for all three. Sony needs the console so it can help drive down technology costs. The tech in the PS3 is used accross multiple product lines for multiple companies. Nintendo and MS can make money on peripherals and games instead of losing money on console design and sales. Sony would be able to make up the loss they incur on HW development much faster because more games would be sold on the console. This would help to drive the price down quicker and move all to profit much faster.

If companies team up, there will be new competitors. stupid Idea, it would just split the market further.

If they did, neither will ever be as good as before, lots of changes lots of new policies, lots of new employes blah blah blah , its not worth it.

Um...theres been an "unofficial" alliance between Nintendo and MS since 2005.

Both have been burned by Sony with the PS1 dethroning Nintendo and PS2 kicking it when it was down. Also with PS2 killing off the massive potential the Xbox 1 had.

Nintendo took the chunk of the casual market and prevented PS3 from really taking off in Japan, Japan being MS's weak point. MS on the other hand agreed to leave Nintendo alone for 5 years in the casual sector and took the chunk of the core market.

Both Nintendo and MS market share grew generation over generation where as PS3 market share fell drastically from PS2's.

Its the best known yet perfect secret out there. Nintendo and MS :)

And now, my real answer.

They shouldn't team up because competition between the three (and three is the magic number-there must be three for there to be balance in the console wars) drives each company to do better. If SoNintendo existed and destroyed Microsoft and the other operating systems, what would be the motivation for them to improve? They'd be the only game in town.

Would Sony have as good of a first party line-up if Microsoft didn't exist? Would Nintendo have motion controls if Sony didn't exist? Would Microsoft keep improving their online if Sony wasn't always catching up to them? Keep all three separate and successful (easier said and done in this day and age).

A complete alliance would be foolish for Sony and Nintendo. But collaborating on the handheld market might be a bright idea.

Say Vita fails miserably and sells say 30-million units life time and software sales are as bad as they were with PSP or worse. Then it might be in Sony's best interest to fold and sign an agreement with Nintendo to support Nintendo's next handheld. Why would this be a good idea, well five years ago the thought would be insane but as you said Apple and F2P content is slowly challenging the handheld market. Analysts have speculated that Apple will use its dominance of the handheld market to move into the home console market. So if Sony's handheld bites the dust then the only thing holding Apple back is Nintendo. In that market Sony should help Nintendo if they go down themselves because Apple taking over would lead to a huge imminent threat to the home consoles.

But as far as home consoles go. I think it would be a loss for Nintendo or Sony to partner on hardware. Mainly because both companies make a shit load off of software royaltees. I think I heard a while back that 17% of every game sold goes to the hardware manufacturer. Thats a massive chunk of change and Nintendo or Sony teaming up would drastically cut their income on software sales. Then their is the fact that Nintendo's software sells the hardware and sells a crap loud, but if they were to be sharing the console with Sony they would lose some sales no doubt about it.

In the end Nintendo and Sony should work together in one way or another in the future if Apple takes down Vita. But the two companies should avoid working together as long as possible and once they start they need to limit their co-operation as much as possible. Only co-operate when its to defend against an external threat. Japanese dominance isn't necessary M$ is no threat and both companies have great market shares their is no reason to combine forces!

Even if they agreed upon that, I don't think the governments would allow it.

Well differences caused for a N64 and a PS1.