It looks like both the Wii U and Vita are headed to early graves. Nintendo and Sony fought valiantly against each other for 15+ years, and yes they had a falling out, ages ago (management is completely different nowadays) ... could there be a basis to form a partnership?

Nintendo is a proud company and won't just accept being a third party publisher IMO. I think they would be amenable to a partnership with Sony though if the terms allowed them to "save face". Sony is Japanese, Sony's president is a video game man (Kaz), which ideally positions him. And Sony is not big enough to buy Nintendo, which I think Nintendo would prefer, an alliance with a Google or Apple or MS could lead to them being buy out. 

Something like this:

- Nintendo gets to manufacture the "Wii Station" which is basically a Wii/Wii U + PS4 in a single box, ships with a Wiimote + Nintendo Pro Controller. Maybe it's a symbolic niche product sure, but I think Nintendo will not willingly forgo their presence as a console hardware manufacturer. Doesn't hurt Sony a lick, just a different way to enjoy PS4. 

- Nintendo gets some cut of Playstation licensing fees. In essence they form something like a "consortium" like the ones for the Blu-Ray and DVD formats, only Sony and Nintendo are the only two partners. Sony can get a bigger cut of the home console royalties, Nintendo gets a bigger cut of the portable royalties. Both companies maintain 100% royalties on their own 1st/2nd party software (no sharing there). 

- Sony and Nintendo jointly agree to develop a future handheld platform. This is the crown jewel of the deal. The new handheld is to succeed the Vita/3DS lines and will be offered in a game-only vanilla option but also integrated into a cell phone design (with buttons). It will be co-branded by *both* companies. So yes, Pokemon on a smartphone ... finally. But on Nintendo (and Sony's) terms. 

- Playstation 4 would get 1080P/60 FPS versions of future Nintendo console titles. I think Nintendo would probably want to keep making Wii U versions of certain games for a few more years. 

- Sack Boy and Drake in Super Smash Bros as DLC (geek out time). Maybe Kratos too if he's not too violent, lol. 

- Perhaps Sony gets some kind of sweetner in the deal like film/TV distribution rights to certain Nintendo properties as well. 

But I think this could be a move that could also let both Sony and Nintendo take back control of Japan and hedge off the growing influence of tablet/smartphone gaming. 

I know the hardcore fanboys will hate this idea, but is it really much different from Steve Jobs being booed at Mac Expo in '97 when he agreed to accept help from Microsoft and said competing against MS shouldn't be Apple's priority. In hindsight that move saved the company and set the stage for rebirth. 

Would take a more desperate situation that they're currently in, but I like it!

Better idea.

Sony and nintendo should manufacture the same console hardware but with different controllers. One sku will feature a regular dual shock while the other will feature a WII mote.

As for the handheld space I think we should just let nintendo do what it wants to do. Sony will essentially be third party at that space. Well I guess sony should have some say in developing the hardware because their a little more on computer engineering but at the same time they should price it $200 or $180 and under.

Competition really doesn't matter if it can't compete in a good way like the 3DS vs vita situation where nintendo has a clear monopoly on the market. I'm not worried about intel having a monopoly in the processor market because their development driven (It means that there mostly dedicated in trying to develop a better product.) which is a fairly important part to determining if a monpoly is bad. 

XBox would die lol

I've got to admit having all my favorite Sony and Nintendo franchises on the same console/handheld would be some sort of wet dream for me lol.

It's a solid idea, but there are better deals Nintendo could make. I think they could get one of Apple or Google to give up their hold on the app store in exchange for exclusivity to their platform. If Nintendo get everything that comes through the game section, Apple or Google could use Nintendo to finally break into the living room.

They would have 100% of the gaming part of Apple or Google, rather than sharing the gaming part of Sony.

It could also bring some other IP back to Sony's platforms -- Bayonetta, Monster Hunter, Dragon Quest which are obviously alligned with Nintendo. 

This is probably sort of what happened:



Development of the format started in 1988, when Nintendo signed a deal with Sony to produce a CD-ROM add-on for the SNES. After several years of development, Sony introduced a standalone console at 1991's summer Consumer Electronics Show called the "Play Station." The system was to be compatible with existing SNES titles as well as titles released for the SNES-CD format. However, due to licensing disagreements with Sony, Nintendo announced that it had formed an alliance with Sony's rival Philips to produce the SNES-CD add-on.
The partnership with Philips did not produce a CD add-on for the SNES. Eventually Sony dropped its partnership with Nintendo and developed its own console independently, which resulted in the release of the original PlayStation, a chief competitor of the SNES's cartridge-based successor, the Nintendo 64.


Development

The Sony/Nintendo relationship started when Sony engineer Ken Kutaragi became interested in working with video games after seeing his daughter play games on Nintendo's Famicom video game console. He took on a contract at Sony for developing hardware that would drive the audio subsystem of Nintendo's next console, the Super NES. Kutaragi secretly developed the chip, known as the Sony SPC 700. As Sony was uninterested in the video game business, most of his superiors did not approve of the project, but Kutaragi found support in Sony executive Norio Ohga and the project was allowed to continue. The success of the project spurred Nintendo to enter into a partnership with Sony to develop both a CD-ROM add-on for the Super NES and a Sony-branded console that would play both SNES games, as well as titles released for the new SNES-CD format.

However, the two companies conflicted over control of the licensing. Under their agreement, Sony would develop and retain control over the SNES-CD disc format, effectively ceding a large amount of control over software licensing to Sony. To counter this, Nintendo president Hiroshi Yamauchi sent Nintendo of America president Minoru Arakawa and executive Howard Lincoln to Europe to negotiate a more favorable deal with Philips, Sony's industry rival. At the June 1991 Consumer Electronics Show, Sony announced its SNES-compatible cartridge/CD console, the "Play Station". The next day, Nintendo revealed its partnership with Philips via a surprise announcement at the show.

About 200 prototypes of the Play Station had been created and software for the system was being developed as Nintendo and Sony attempted to sort out their differences. In 1992, a deal was reached allowing Sony to produce SNES-compatible hardware, with Nintendo retaining control and profit over the games, but the two organizations never repaired the rift between them. By the next year, Sony had refocused its efforts on developing its own console for the next generation of consoles.


Legacy

After the original deal with Sony fell through, Nintendo continued its partnership with Philips. The deal produced a few games featuring Nintendo characters for Philips's CD-i multimedia device, but never resulted in a CD-ROM add-on for the SNES. The CD-i itself was pegged as a commercial failure.
Ken Kutaragi and Sony continued to develop their own console and released the PlayStation in 1994. The CD-based console successfully competed with Nintendo's cartridge-based Nintendo 64. The broken partnership with Sony has been cited as an error on Nintendo's part, effectively creating a formidable rival in the video game market. Nintendo would not release an optical disc based console until the release of the GameCube in 2001.

I think we're all aware Sony/Nintendo had a partnership in the late 80s which fell apart in the early 1990s, but lets be real too -- that was many lifetimes ago in video game ages.

Hiroshi Yamauchi has passed on and the president of Sony when that contract was signed initially in 1988 has also long since passed away.

Neither Kaz Hirai or Satoru Iwata were even employed by either company (officially anyway) back then. Times change.

Sony has worked with rivals like Panasonic in the recent past too, working with Nintendo again would be no big deal. Honestly the Sony/Nintendo rivalry never got as heated as the Nintendo/Sega one did, and today Mario and Sonic can be in the same game together.

If Sony could get an agreement in place with Nintendo before MS/Apple/Google get to them, it could a huge coup for them too. Not only in terms of absolutely stomping the XBox brand in exclusives, but it could a huge boom to their Xperia/Cell Phone business if they could get the likes of Pokemon, Mario, etc. on a proper gaming phone (with actual buttons). Violent/"dude brosey" games just don't seem to sell on portable devices, people like colorful characters even on iOS (Candy Crush, Angry Birds, Plants Vs. Zombies) ... Sony getting an agreement in place with Nintendo would immediately make such a phone/handheld device unique from everything else on the market. 

Yes of course they'd have to split profits with Nintendo, but a potential Sony-Nintendo portable platform with cell phone and non-phone flavors could sell 150+ million units IMO, and even if Sony got a minority stake in the licensing royalities there, it would have to be many, many times more profitable than their current Vita business. 

PS4 meanwhile would just flat out dominate the XBox 1 (probably talking PS2 levels of dominance here). Drake, Kratos, Mario, Pikachu, Link, Smash Bros (w/Nintendo + Sony characters?!), Gran Turismo, Sack Boy/Media Molecule all exclusive to one system? Game over.