Granted, PCs are closer to what I imagine, but that doesn't really change anything when we're discussing consoles. PCs will always be different than consoles, and I certainly have ideas for how it would work on there as well, but as you said, it's already heading in that direction. I love that Valve have brought Steam to the Mac and the way they've done it as well, but consoles are not PCs, even if the gap has closed a bit this generation, and so their solution will be different.

Thus PCs are not really relevant in this discussion.

Convincing either of these companies to give up a portion of their freedom in hardware and profits as well is pretty daunting from the beginning, but I think you may be right that Nintendo will be the hardest nut to crack. But policies can be changed and this is not impossible to achieve.

PCs aren't relevant because they are doing what you want already? PC's and consoles are not so different anymore, and from a hardware perspective they contain all of the same parts. The only difference right now is that most people do not have their pc's hooked up to their tv's but even that is changing now that tvs and pcs share alot of the same connections. What you want is mostly in place already, and the rest is on the way. Consoles will never be like that though, they will just be replaced with pcs and possibly their own OS to dual boot from.

Then you don't know what I want, because consoles are a major part of that. And unless you want your PC to come with locked hardware configurations, consoles will continue to exist. Or be replaced with services like OnLive, but either way, PCs are not the answer to this specific problem.

For gamers:

- Many more games to choose from / You don't have to limit yourself to one console and its games if you can't afford another one. (PC has the most genres and the most games)

- You can play online with your friends, no matter what console you own. (Now with valve some games can be played across mac and pc)

- More freedom to find your style of gaming and play the games you like. (You can use keyboard and mouse, one of many third party controlers)

For developers (and publishers too):

- A much larger userbase without the need to develop games for several platforms (or port games) / More sales. (Far more PCs out there than any console)

- Less risk when creating new IPs. (Far more independants and indie devs on PC)

- More controllers that need to be supported.

For hardware sellers:

- More competition in the hardware sector.

- More competition in the online sector. (online gaming on the PC has many of the features of live if not all and is cheaper)

- More customers for their online services and games (potentially).(again far more PCs out there than consoles)

How does the PC market not meet what you want? I think all you really want is to have sony, MS, and nintendo publish all of their games on the PC

Look, we both agree that PCs are closer to this model then consoles are currently, but unless you want to argue that PCs are consoles, you're off topic, as we are discussing consoles. And while PCs are closer to the model, they are not there yet either.

So can we just agree to disagree and stop this irrelevant discussion?

I don't see it happening for many reasons but I will try to stick to ones not already covered in detail. So issues I see...

Console manufacturers make most of their money from licensing games, in a scenario you outlined ether all 3 providers would be charging a licensing fee pushing the cost of games far higher. Or no one can charge a licensing fee and just about everyone will drop out of the hardware space. 

Who (or how) decides what the hardware spec will be and when a new generation is released. 

which online system would be used, you say that all would be in place but that would mean that not everyone could play together, defeating the purpose. You would need 1 matchmaking service and one cross game chat system to prevent fragmentation. And no one would pay for live if they can just choose a free service, unless they are offering exclusive services which again spoils the universalism. Also how would downloadable game services (XBox live arcade, wii ware PSN etc) be handled, it would need to be one (who would run it?) or providers would be competing to get exclusive games which they would undoubtedly try to tie to their consoles to spur sales of their hardware.

 if you are allowing anyone to provide peripherals that work on all platforms and everyone is playing together, how do you stop people with keyboard & mouse pawning everyone with gamepads in shooters and RTS?

This would be the biggest hit for manufacturers to take. I imagined there would be licensing fee still, but it would be split among them. They'd also be able to split some R&D costs among them, so the investment isn't as large.

The overall process should be watched over by a board of some kind, where all manufacturers would have a say of course.

I mean that all the network systems should be able to share players, so no matter what, you can still play with everyone. Xbox Live would get costumers because it offers more and better services, online services don't have to universal, there just needs to be a structure to accomodate them all.

I'm guessing each provider would their own shop, but unless they want to limit their shops, they open them up to the most amount of people. People won't be choosing one system over another due to downloadable games, I doubt it at least.

Developers would have to balance their games and let people play with who they want. If developers want to support both gamepad, motion controllers and K&M in their game, then they would have to balance their game some way, like by letting people choose who they want to play with. If you're playing with a gamepad, choose not to play the K&M people so you won't be owned unfairly.

It's important to remember that this isn't some finished blueprint of how it's all going to be, I'm just throwing my idea of how it might be, and some parts have been thought through more than others.

still leave the question of how it is split, is it by hardware sales %? or equal and what would you need to do to get a cut.?

that would require some form of unified service that I imagine everyone would need to contribute to and maintain.

what services do you think XBL would have that others wouldn't? Avatars? achievements? which I could see causing issues if games have to support multiple different achievement systems, all games would need to support all so that would require agreements on how many per game, how many per DLC etc etc

I see exclusive games being the main attraction TBH and with the increase in digital distribution and the increase in DL only games quality I see it being major.

well you asked for thoughts and feedback so I am giving it lol.

I don't know, I don't have anything that qualifies as a solution in my mind at the moment.

I don't have a lot of knowledge on the area, but I would imagine that some sort of backbone structure to allow these things could be built.

I don't know the specifics of what should be supported how, that's a little too detailed for now. But with something like what we have now, XBL offers cross game voice chat and parties as two of its main features. I imagine this would pull in some people, and I'm sure Microsoft would expand on it if this scenario were to come true.

But there would be no reason to be exclusive to one shop for developers and publishers, and with increased focus on income from software in this scenario, even the hardware manufacturers should think twice about making their game exclusive to one shop. 

And I really appreciate it, I just wanted to point out that not everything is planned to the same level right now.