I posted this in other Pacther/Nintendo thread, thought it would be fun to debate on its own merits. Just a hypothetical, for hardcore "console warriors" don't get too upset by it and try to look at things logically, remembering that Nintendo's share of the home console biz is being whittled down to irrelevance and MS has investors who want their game division spun off/sold. So I suggest: 

- Nintendo and MS agree to partner, MS agrees to take a *secondary* role to Nintendo in terms of branding and control. Nintendo gets a 65/35 split of third party licensing revenue and console profit or losses. MS agrees to pay Nintendo a decent sized money hat every year of the agreement and to assist with marketing costs. Nintendo reserves the right to renegotiate/back out of deal after 5-6 years. 

- Satoru Iwata is president of all worldwide gaming divisions under the new alliance. Phil Spencer becomes new head of Nintendo of America and unifies NOA + MS Western studios. Works well since both companies (NOA and MS) are across the street from each other in the Seattle area. Reggie Fils Aime is vice president, Ken Lobb works to transition both sides to work together -- perfect fit as he's worked with both Nintendo and MS in the past. 

- Hardware going forward will be co-branded, with Nintendo as the lead brand. Nintendo and MS assist each other in hardware design/development. 

- Nintendo agrees in return to use Microsoft's online infastructure (XBox Live + MS Cloud) and to use Windows 9 mobile as their OS for the next-gen Nintendo portable, bringing MS' struggling mobile OS to a larger new audience aside from just Windows Phones. A big win for Microsoft here, MS doesn't really need the peanut profits from the game business, but they do need increased marketshare for their mobile Windows, getting kids hooked on Windows mobile over iOS and Android would be a big win for them. For Nintendo it saves them time/money from having to develop their OS and having wide functionality for it. 

- Nintendo + MS jointly launch next-gen 4K capable machine in fall 2017 (one year ahead of Sony) with Mario + Master Chief + lots of third party support, go on to theoretically dominate Sony. Win-win for both sides IMO, Nintendo gets badly needed increase in marketshare (especially in the West), MS gets to keep their toes in the game business while being able to go back to focusing on their main objectives (Cloud/OS/mobile) and lots of new Windows mobile customers. 

Since you did post this in my thread i don't think a partnership like this would work. Japanese and American business philosophies are completely different. It would be like if Honda teamed up with ford to release a car.

Nintendo prefers to work with Japanese companies. If anything they would team up with Sony.

That's why Nintendo would have primary control of the gaming side of things. Which I think is OK even by MS as I don't think Nadella and the new board at MS really wants a hardware game division all that badly anyway. Nintendo would have to compromise on a few things, but a little compromise to regain a big control of the Western market I think in the end would be worth it.

That's true, but I don't think Sony would be willing to give Nintendo as much control and a majority share of profits. Game profits don't mean sh*t to MS, they're peanuts for them, but for Nintendo it's their main business so it's a big deal. 

Would Sony be willing to give Nintendo even a 50% cut of their profit from hardware/third party licensing? I doubt it. Sony needs the money from gaming as much as Nintendo does. MS is the only one that really doesn't need that. 

Nintendo needs to get over their xenophobia of the West anyway, there simply is no future for a game company that ignores the Western world when the West in now like 80%+ of the handheld business. This is better than the alternative of eventually (possibly) having to grovel around like Sega or something as a third party pimping Mario out to every platform under the sun if things continue to go bad. 

The best of the East teaming with the best of the West.
I'm Xbox first but Nintendo console is the best complementary system for Xbox.
If you have Mario and Master Chief, you have it all.

I hope to see this one day, but it is very unlikely

However Philips is a dutch company and they teamed up with them

Philips is a dutch company and they partnered with them

Agreed, such a console would have no holes in it in terms of content appeal, they would be able to able to appeal to every demographic and would get full 3rd party backing from East and West. 

Plus hey Nintendo could go back to managing/reviving Rare and would get a cluster of new IP for their handheld division too -- Halo, Forza, Sunset Overdrive, Gears, Banjo-Kazooie, Perfect Dark, and Killer Instinct. Perhaps overseen by Nintendo, Rare could regain some of its former glory back or at the very least some of their IP could become relevant again. They could take over the Donkey Kong Country franchise for one (Retro can move on to other things, I think everyone would be happy with that). 

Which if this was a possible, would be ideal if Nintendo was incharge of the entire gaming division at Microsoft (which includes hardware). I wouldn't want Nintendo compromise anything. I would want them to keep the mobile business and IPs entirely their own thing should Microsoft try anything shifty.