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Soundwave on 18 May 2013
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EDIT: I have to be clear, this is not an MS bashing thread. XBox is great. It's just looking more at the indirect impact the arrival of the XBox brand had on the trajectory of Nintendo.

Not a knock on MS' efforts to be sure. MS has done a very good job with the XBox brand. But they make so much money from their core business, games are just a throw away for them, and the whole paranoia they had about Sony being a threat to Windows was misplaced all along (Apple was always the real threat that they didn't see coming). And I think Sony basically would've eventually done most of the same things as Microsoft (XBox Live really did push the industry, but Sony probably would've gotten there a little later).

What the XBox did though IMO is it really hurt the GameCube. Even with all its missteps with the GCN, it was still a damn good system that had lots of pretty good third party exclusives (Resident Evil, Tales of Symphonia, MGS: Twin Snakes, Final Fantasy: Crystal Chronicles, Star Wars: Rogue Squadron II/III, etc.). If there was no XBox, I can't help but feel the GameCube would've sold much better. Nowhere close to the PS2, but certainly probably 35-45 million at least.

I think it would've been positioned OK as a much more developer friendly alternative to the PS2 that could push out better looking games. With Sega out of the way, Nintendo would be the only alternative. But XBox with Halo really split what was left the market outside of the PS2 and that forced Nintendo into a compromised position even though they did a lot of good things with the GameCube.

MS' entry into the game business also led to the sale of Rare to Microsoft and they've basically been neuetered ever since. Nintendo may have still sold off Rare, but in that case they would've been forced to sell them to a 3rd party at least and things like Banjo-Threeie or something on future Nintendo consoles still would've been possible. 

It also led Nintendo down the path of casual gaming, which while being wildly successful for about 4 years has turned into a dead end for them now and moved them off the path of making reasonably spec-ed hardware.