Why they won't do it
Microsoft's whole goal is to stop Sony from disrupting computers. They created the Xbox to stop Sony, and it has been working. They are more concerned about destroying Sony over anything else. There would be no motivation for Microsoft to work with Sony as profits are not their goal.
Why, even if it did happen, it would not work
Sony and Microsoft can't win a battle for the expanded market. Nintendo is a company that can harness the power of a console. They make the console designed in a way that will allow the games to work on it. Nintendo is an integrated software/hardware company (much like Apple). They can make the hardware work for the games. Sony and Microsoft are not. This is why Sony focused on putting other functions in there like DVD/Blu-Ray drive. Nintendo has the upper hand in this situation, and at this point, there isn't much they can do.
