M$ will always have money, but their policy has not been to invest in first party studios

Hrmm....Sony and a PC company? nahhhh. Microsoft has much better relationships with them.

Well, plenty of people have said that Naughty Dog is the top developer, when it comes to multithreading in code. In that regard, they already have the best possible dev out there for their specific hardware.

On the other hand, any company buying Epic would be making a very good choice (especially if their new engine is great. If not, then the crysis people would be the people to buy imho)

Epic isnt a PC company. They are a middleware/hardware support company. The hardware they support, happens to include most major PC hardware, but they are not a "PC company".  Engines, design tools, programming support, technical integration & etc for multiple platforms... that is what Epic does. Which is also exactly what Sony failed to provide pre PS3 launch, and along with poor pricepoint, is why PS3 suffered for so long.

Oh, and Epic occasionally builds a game based on their tech , partly for game profits but mostly to showcase.

 EDIT: @papflesje : Naughty dog is not set up to provide tools or support to 3rd parties. They are skilled with certain aspect of coding to be sure, but they are primarily a game maker. Epics buisiness model is one of licensing to 3rd parties and providing not just tools but support for those tools.

 Somethng people forget, is PS1 succes was largely prediated on Sony wisely aquiring European Publisher Psygnosis , which was responsivle for some of the best Amiga games, and also had some really good development tools that were converted for use with the PS1 and shared with all, significantly lowering early dev costs and increasing quality. Sony needs to remember these things.

Until Microsoft made a system  Epic was a PC company who also created engines. :)

Although buying Epic would be a Epic win considering their games.. financially its not as certain to be a big plus..

Well Epic are expanding, but Epic themselves only have about 75 employees, I know GeoW was made so cheaply (like $20m) because they outsourced coding to China. So they are smaller than Naughty Dog, so you wouldn't expect them to release that many games actually. They do now own Chair entertainment (who made Shadow Complex) and People can Fly, so I think they are expanding to some degree to make more games, but they are mostly just an engine company....  UT 3 is certainly an example of showcasing, especially on the PS3 as around then people were having problems with the UE 3 on PS3

Well yeah, thats basically what I was saying. Thats why it would be a coup for Sony to aquire them. Epic supports hardware, with engines and tools and libraries to make use of hardware features, they also provide developer support to their licensees. IE: Epic provides things Sony has notoriusly had a hard time with the past 5 years. Epic has also opened overseas offices in Asia to support their licensees there.

 The reason Sony should aquire them has nothing to do with their games, they should aquire them for the same reasons they aquired Psygnosis back in the 90's - to provide tools and publishing support. While this is less key for the current gen, when the next gen rolls around if Sony does not do something and provide tools and services to lower the barrier to entry and cost of development on their new platform, MS will have another leg up on them again for the simple fact that MS will still be operating on a DirectX platform , and even though the hardware capabilities will improve - the difficulty of coding will not necesarrily be more difficult. If anything, it will be easier because performance tweaking will be less of an issue on more capable hardware.

If Sony releases another new system with a barebones dev kit and little developer support, they are in for a bad time. Instead of trying to rebuild this functionality internally, it might be logical to aquire a company who already has that capability - in which case Epic would be the #1 contender.

I agree, but a cheap solution would probably be an expansion of the ICE team. The problem is, with Epic going to Sony, would they be building engines, or just making dev tools? Because their primary product is the UE 3, and so that obviously goes out the window, as there are much better PS3 only engines around, and so they are just there to provide support for 3rd parties and 1st parties?

I think Rare screwed it up for everyone. Never before has a "sure thing" gone so wrong.