What are you talking about? Very small margins? Last I checked the PS3 was selling at a LOSS. So was the Xbox (though i hear they're breaking even or even making a small profit now). If the hardware sold at a small profit margin, that would be different. In fact that's what Wii does!
By agreeing on a unified system, it takes the emphasis off the hardware and more emphasis on the Software, i.e. THE GAMES. That's where all the money is made nowadays, unified systems or not. However, with a unified standard, it would be cheaper for software developers to make games, since they only have to conform to one system. In turn, if Sony wanted to release their own game, their market wouldn't just be limited to their proprietory PS3, but instead people would be able to buy their games for their generic PSWii60's.
By turning the hardware into a commodity (i.e. something common like toothpaste or tomato sauce), then it opens it up for the consumers to have a freedom of choice-- they are not locked into buying one system with just one set of games!
Just like with movies, people don't want to have to buy an HDDVD system to watch Transformers, and then have to own a Blu Ray player to watch Spiderman. In fact, I would argue that if you only had to buy one system, you would have more money to buy more MOVIES. Likewise, instead of owning a Xbox to play Halo, then a PS3 to play Gran Turismo and then a Wii to play Zelda, a person would be able to own a unified merged system and have more money to buy more Games. More games = more profit.
