Microsoft and Nintendo would be a horrible mixture in my opinion. To be honest Sony and Nintendo would work infinitely better together as far as combining two of the three goes.

Sony and Nintendo would've been a redundant mix. Smash Bros and PS All Stars in one console? Mario Kart and LBP Kart?

Why not Smash and Killer Instinct and Mario Kart and Forza? Or Mario and Halo?

Ummmm NO. I cant even get into it without a ban, so I wont.

2 billion per year? i stopped reading there

Put more thought into it this morning and came to the following conclusions.

Note: all of this is predicated on Microsoft wanting to cut their losses with the Xbox division which I think is possible, but not likely.

-Nintendo would benefit more from IP and studios than the Xbox brand, although keeping the brand going as a 'hardcore' machine may be worth their while.
-Kinect could be very useful to their QOL plans.
-Networking expertise would be INCREDIBLY useful for them.

Nintendo buying would be beneficial to Microsoft:
-Easy cash.
-Not giving market share/ expertise to a rival firm (eg Apple, Samsung, Google etc).
-If Nintendo stock was part of a deal, could give them a steady ROI allowing some saving of face with investors.

I think the question from a gamer's perspective is what would it mean for the consoles, as it seems to make sense for both Microsoft and Nintendo?

Given that our starting assumption is that Microsoft wants shot of Xbox a couple of years of failure (meaning that in my scenario this would occur early 2016 at the earliest (maybe scraping the sale into 2015 financials), I think the most likely scenario is that Nintendo would immediately merge the 2 hardware divisions and task them with making a new console for release late 2018.

Existing stock of Xbox One would be sold through, with maybe a small number still being produced. Ultimately Xbox One would still exist, still being managed and run by the same teams. Games already in development would remain in development for their existing console, with the Xbox maybe receiving some Wii U ports and vice versa where it makes sense; to build up that cross-platform fanbase.

I could see Xbox as a brand surviving, but as a publisher of the more adult and mainstream titles, leaving Nintendo as the family and niche publisher. (Look at Disney/Miramax for an example).

After putting both consoles on cruise control for a few years Nintendo would release the new home console, built on the back of both the Wii and Xbox brands. The remnants of the Xbox marketing and branding would be subsumed into NOA and NOE to assist in those markets, and, erm... not, in Japan. And all of Nintys' developers would be tasked with producing new games for the new platform, with the plug being swiftly pulled after launch for Xbox One and Wii U.

Note for people who can't read multiple disclaimers; this is how I see it going down on the off chance that the Xbox one is a catastrophic failure (which I don't think it will be), and that Microsoft decides to axe it (possible if it's causing heavy losses) and that Nintendo decides to buy the division (not likely, as I assume the execs prefer to swim in their shed load of liquid cash rather than put it to good use).

This is NOT a prediction. I DO realise that the Xbox One had a great launch and YES, I know that Nintendo is DOOMED (as it has been for >100 years). Peace.

I don't think you would also, i mean. A nintendo and microsoft system will end up having zero jrpg's

Nintendo dont need this??!!!!!!!!!!!!!!!!

Why is that?

Nintendo consoles don't get jrpg's and microsoft is rejected in japan.