MS cannot buy Sony - that's just a dumb rumour. Sony is simply too large and MS ain't gonna takeover a major Japanese business. As for merger - given their twin styles couldn't be more different - I doubt it.
Besides, this gaming view ignores the fact that both MS and Sony are much larger in other areas. MS is going to be too busy trying to get Yahoo to compete with companies to worry about its tiny entertainment division.
Also, to original post - on evidence to date (which incudes PS1, PS2 and Xbox) Sony clearly know how to sell software even if they've struggled a little with PS3. MS has still to prove it can win a generation with both SW and HW. Heck, Nintendo HW and SW has caught up with MS in 12 months and time adjusted Sony is matching MS so one of your two basic points is completely wrong - mind you the other is correct :)
Try to be reasonable... its easier than you think...
