I disagree with this vision and I think rather that Nintendo, Sony and MS should be forced to work together in order to help incorporate things like cross-platform multi-player or easy porting, as de-facto industry practices, as well as forbid ignorant and belittling PR.

I don't think this would be the best state of affairs for gamers. First of all, they would jack up the price without feat of competition. Second, we'd have to deal with any fatal problems with the console, and have no other space to go to unless we want to play PC games (which I find depressing to even think about playing), or simple as hell mobile apps (which I do play, but only for a couple of minutes at a time, 1-3 times a day)

Wont be good. This would allow a competitor to enter the market. MS Sony and Nin are doing it three ways, thats good enough forme.

The most I could ever see is the three of them working together secretly to lure a competitor into the market (Apple, Google, Samsung) and then starving them of any good games (Which would also require co-operation from a huge amount of developers..), causing their venture to fail and then going on their merry way unchallenged. Though apart from causing said competitor to stay out of the games industry, it has very little point, so very little chance of happening :P

Who could realistically compete against a console that has Mario, Halo, Uncharted, Zelda, Pokemon, Gears of War, Gran Turismo, God Of War, DKC, etc. exclusive though? 

Hell, maybe Rare could become good again by getting back in touch with Nintendo, lol (Banjo-Kazooie and GoldenEye Online plz). 

I think even Apple would say "screw it, we make enough money from phones/Macs/tablets, we don't need the aggravation of losing billions to get a foot hold on gamers". 

If I was this supposed "MS-Nintendo-Sony" constortium, I'd basically tell third parties you can't publish for our console period unless you give us certain franchise exclusivity. Which company would seriously risk being locked out of such a platform? So on top of the above franchises, they could also mandate other IP like Resident Evil, Final Fantasy, Grand Theft Auto, Call of Duty (gulp?), etc. be exclusive. Who's going to stop them?

It wouldn't be good for consumers though, we'd lose any leverage we have to force these game companies to keep prices low. With no competetion they could price their products at whatever they wanted and probably let console generations run on indefinitely. 

Its a rule of thumb. When there is only one competitor on one market. Specially with vast audiences. People would always want something different. No matter how "omnipotent" a competitor is. 

I dont even know crap about economics but it makes sense. 

That's false and demonstrably so. Even if there's no competition, the reason prices are lowered is often to increase volume of sales as a whole, which can often mean more profit anyway. Pretty much every generation before the current one (and SNES vs. Genesis) has been a monopoly and yet the Wii was almost breaking records for holding its original price for the longest, especially compared to the far more dominating PS2, despite having far tougher competition in the HD consoles. Also, Nintendo, despite never having any significant competition in the handheld space (uptill the PSP and even then not really) has always kept a very decent price.

Video games aren't a necessity; if the price is too high, people can go and read a book or play tag. There is a very natural incentive to keep prices low, which is to keep sales volume and thereby profits high.

Because of this, I'd be quite alright if there were absolutely no competition. That said, I definitely don't want to see a console made by all three or even your idea. I'd much rather see Sony and MS exiting the market and Nintendo taking over completely, :P.

Such a venture would be devastating for the consumers: we'd be sooo broke!! Imagen how many awesome games that would be released!! No one in the world would afford to get them all!

A console that:

breaks down for no reason +
has low  processing power + 
is really expensive.

MicroWii Play

That's wishful and naive thinking.

It would just lead to a struggle to get control over the operation from one company (most likely Microsoft). Also, the vary nature of the companies would cause further struggle (disagreements in policies, etc.)

Nintendo doesn't play well with others. Anyone else remember the origin of the Playstation?