I think a Microsoft/Sony merger of some kind would benefit both companies:
-Sony is good at hardware which would go well with Microsoft's software focus.
-Microsoft could move Microsoft Game Studios under Sony Computer Entertaiment allowing Sony to control it.
-Microsoft's Entertainment and Devices Division could be phased out with anything worthwhile (people/technology) moved to Sony
-Microsoft would gain entry into cell phones, portable media players, etc, thanks to Sony
-Microsoft could phase out the Xbox brand and finally have success in Japan (Playstation 4 would be a monster console with franchises such as Halo, Gran Turismo, Gears of War, Ratchet & Clank, Banjo Kazooie, Fable, God of War, Resistance, etc and likely have control of other key franchises like Metal Gear Solid, Grand Theft Auto, Mass Effect, Bioshock, Final Fantasy, EA Sports, etc.)
-Microsoft software technology could go into Blu-Ray
-Sony/Microsoft could take on Apple, a common enemy
-Microsoft could control study/home office while Sony controls livingroom, there would no longer be a rivalry between them that is hurting either's chances of controlling the livingroom.
-Sony's media empire could help Microsoft it in's online fight against Google and Yahoo
I really think such a merger could play on the strengths of both companies and create a hardware/software/media powerhouse.
