Two words to describe this thread: overreaction and premature.

To be honest I don't think three consoles is really ideal anyway. I think this would be good for both Sony and Nintendo in terms of generating more profit for everyone and good for the consumer in the end as its less hardware for everyone to have to spend money on (leaving more money to be spent on what's important). 

It's good for the future of the game business as we know it too IMO iOS/Android gaming is a problem for the industry and needs to be confronted if Sony/Nintendo want "their" style of industry to continue to flourish. 

2 consoles is enough to ensure healthy competition (see MS scrambling to change many of their XB1 policies due to the PS4) ... three just creates one more system that a developer has to stretch their resources to provide for. And even if all three are good systems, that really isn't a great situation for the consumer, because then to get all the good games (assuming all three have good games), you end up actually paying more for your hardware bill at the end of the generation.

The industry with the exception of the last cycle, where I think Nintendo just came upon one of those "once in every 20 years" type ideas with the Wiimote/motion gaming ... traditionally does not support more than 2 consoles strongly at a time.

Turbo Grafx 16 got the raw end of the deal versus the SNES/Genesis for example, Saturn fizzled versus the N64/Playstation, etc, and the failure of the Saturn sent Sega financially into the sewer.

For Nintendo, doing that right now would be like admitting defeat with WiiU, and the same goes for Sony with Vita. So because of that what you describe is impossible.

Now, on the other hand for the next gen, the 9th, I won't say that it's impossible. But it would be really hard.

And please, a smartphone with buttons as a handheld? That's what the N-Gage was and we all know how it ended.

I thought the slider concept for the Xperia Play could work, Sony just didn't support and doesn't do well with cartoony style games that seem to be popular on phones. 

That's where Nintendo comes in. Pokemon and Mario and suddenly a whole new generation of kids are asking for this as their first phone (provided it does everything else they want in a smartphone). Those franchises could reach a lot of girls too on a smartphone. 

I could only see it working (disclaimer: I have little imagination) with Android and if the phone aspect only worked through a handsfree device (mic+earplug). Of course the handheld would feature a frontal camera so video calls could still be made.

That way the machine could be better designed for the gaming needs without losing its appeal as a smartphone.

The problem is that it could end being too expensive.

I would envision it as two models as well, a non-cell phone version ($200-$250), and the cell-phone version (same price actually but with a 2 year contract). Same thing as the iPhone and the iPod Touch ... the Touch is basically an iPhone without the phone part in it. 

Cell-phones move tremendous volume because the cost is largely subsidized by the cell phone providers and monthly fees. People induldge in cell phones because they *need* a cell phone, whereas a game system is not seen the same way on its own. 

But it could be nice if I'm trying to decide between 3 or 4 Android phones and the Sony/Nintendo one plays Mario/Pokemon/God of War/Smash Bros. ... I might be swayed towards getting that phone. 

I think it would definitely help differeniate Sony from the sea of other Android phone makers like Samsung. 

As long as Sony doesn't make the memory cards...

Nintendo still have animosity towards Sony over the whole PSX fiasco. Nintendo would never go to Sony, theres to much bad history. If anything I believe theyd rather help Microsoft out of the 2. They don't have a bad history with Microsoft the way they do with Sony.

I really want to see a Nintendo Playstaion

I'll have to disagree with you here.

While Nintendo may (or may not) still be upset by the SNES CD turned into PSX affair, they still share, albeit slightly, the same view when it comes to gaming than Sony does; as has been proven very clearly this gen, both see consoles as gaming devices that can also do other tasks, while MSoft sees them as multimedia devices that also plays games. It's a subtle but important diffeence in this kind of joint ventures. Also both Nintendo and Sony are japanese, something that while it's not as important as it used to be, still matter to some shareholders.

Besides, Nintendo weakest territory has always been Europe, and MSoft is still strugling here too, so the merging console would fight to win in the USA (probably ending first) and Japan, but will still lose in Europe. Going with Sony will ensure them being first not only in Japan but also in Europe and probably also in the USA.