I actually don't think more competition = better industry. This one of those phrases that's just thrown around without any thought put behind it.

The industry is so fragile that having too many players in the field is a bad thing.

You NEED two solid game companies to push the industry ... it's not like Sony acted crazy when they were competing against mainly Nintendo in the 1990s and early 2000s. The industry was healthy then.

But three ... I really question if the game business needs three major console manufacturers. Is the game industry really better off with two (basically) carbon copy players in Sony + MS and Nintendo being pushed out to make cell phone games or something? On top of Sega basically being gone?

I say no.

Nintendo was more competetive with the core market in the 1990s because they had a core audience to cater to. With MS entering, all MS has done is oversaturate the field so much that Nintendo opts to take a more casual approach, and MS still can't beat Sony, so what's the point? They don't need the game industry, and while they were busy chasing the game audience, they took their eye off the real threats to their main OS business -- Apple and Google. 

Considering the a-holes Sony became when they were the dominant force in the console market, I don't think you would have liked it. MS has been around in gaming longer than Sony (although within computers) and was able to push ALOT of computer gamers to consoles through Halo and the likes. I would even wager that, without MS, the console market would never have grown the way it did during the 7th generation.

The 7th generation growth was virtually all Nintendo getting to casuals in the days before iPhone/iPad. All MS did was split the Playstation 2 userbase into two for a period of time (which seems like that's over, since Sony was never going to release another $600 system again with or without MS). 

This!
This needs to be an option in the debates/discussions/arguments that are annoying thread.

I think it would be cool if there was one universal home console (without the Playstation, Xbox, Nintendo brand to it).  No more wars, well no more hardware wars, there can still be competition in software.

If people only bought the Wii for Wii sports, then what explains the other 790 million games sold for the Wii? 

http://www.vgchartz.com/platform/2/wii/

I would put in my two cents, but I think everyone(besides the OP for some wierd reason) agrees it would be a terrible idea.

PS1 had one of the best libraries ever and it only had real comp from N64. (Does Saturn really count.....)

Microsoft selling the Xbox division to Nintendo, now THAT would be good for the industry. PS1/ N64 era showed those two are all we need, and it would ensure competition.

Three is a crowd in the console market, it always has been.

Yeah the console business has traditionally never really supported three console platforms at once. Super NES, Genesis and ... Turbo Grafx 16 (odd man out)? Playstation, N64 and ... Sega Saturn (nope). PS2 kinda just ran away with that gen, but the XBox probably hurt the GameCube by splitting what was left of the market and forced Nintendo to go chase casuals, which in the long term IMO has not been good for the industry.

The Wii was the only time it really happened, but that was the definition of catching lightning in a bottle and is something that is almost imposible to repeat on cue. 

It's like saying more movie formats (Blu-Ray, HD-DVD, Super Duper DVD, etc. etc.) would be good for the industry ... no it wouldn't be. No consumer wants to have to choose between three or four competing movie formats, and I don't think they want the same for video games either. 

Less can be more sometimes.

Well, ofcourse it was :). I never took away anything from Nintendo, they contributed in a great way (and it was actually only MS and Nintendo that grew during the 7th generation) but Ms helped aswell. Sony are amazing at creating games, but their attitude at the beginning of the last generation was really rotten and thanks to the competition from MS, they softened up alot.

They got the reality check that MS got last spring and that is a good thing (mostly). Withous MS, the console race would be much more boring and MS has also contributed with some of the most amazing games we have seen in the industry.

Actually, I felt the same way as you do when Sony released the PSX and Sega went out of business. I felt that Sony never had any place in the industry and destroyed it because Sega fell. Well, that wasn´t really the case, blaming another company for the failures of your own is never a good way forward.