Nah, I think it'd be the opposite. Such a console would have the richest catalog of 1st/2nd party software and would have all the 3rd party support too. Suddenly, Sony's lineup would seem quaint by comparision.

Will never happen. Ninty is its own company. They will never merge with anyone.

Five years ago, I'd agree, but the current Nintendo faced with the humbling sting of three consecutive operating losses in a row, a Wii U flop, and the alarming erosion of the handheld market I think would be more open to a partnership like this than some might think IMO. 

The main caveats here would have to be how much control Nintendo has and would MS be a threat of buying out Nintendo at some point later down the road (though this may be a non-issue now that Nintendo has repurchased most of Yamauchi's shares). 

If nothing else, simply getting MS out of the console business makes Nintendo the defacto "other guy" in the business and would increase their stature in the industry by default. Third parties would support them just because they don't want to make games just for one platform only, more consumers might give them a chance as the spotlight is no longer split three ways, etc. etc. 

I disagree because I don't think the current hardware is enough to support the brand. The only real way for that to work would be if Nintendo and Microsoft made a console together and that wouldnt' really work either.

I say that because it would pretty much be Nintendo trusting it's future to how dedicated Microsoft is to the console market and with all the pressure for them to just cut and run. I wouldn't bet the future of my company on it.

Like I said, the best option that would allow MS to stay in the game would be to go to a software only structure that would eliminate the costs of having hardware and would free up the market for more financial stability.

care to explain why?

I would presume that Nintendo would make the hardware. 

Microsoft Game Studios would stick around and become like a 2nd party (in effect). They would publish all the Halo, Rare, Gears, Forza IP, etc. 

I don't know if Steam gaining active users is indicative of PC Gaming increasing. Not only is Steam not mandatory for PC gaming but I don't know how Steam defines "active" and I doubt it accounts much for loss of activity. With regards to hardware, there is no such thing as a dedicated gaming component in the pc, tablet, or smartphone spheres. Only software can be tracked reliably on these platforms and then we arbitrarlly distingusih the hardcore from the casual with the former on pc and latter on tablet/smartphone when it could easily be the reverse.

Rather than a diminishing of the market, I think that the gaming market is becoming more mainstream, in such a way that the movie industry in basically is in the entertainment industry. 

Of course there will be the dedicated gamers, just as their are dedicated movie goers, but once dedicated consoles have run their course and fully integrated into the digital realm. We won't have console sales to track anymore, or rather we wouldn't be able to measure the hardcore anymore.

But if MS was only dealing with the Software side than they would be better off just going full third party wouldnt' they? Why would they want to limit there own market by only making games for one platform? It would be great for Nintendo, but  not so much for Microsoft.

There's no way in hell this will happen.

What mistakes did you notice? You seem to disagree with the article but have yet to explain why?