Sometimes choice is overrated for consoles. 

I don't want four or five different disc formats for my movies (Blu-Ray is just fine). Even having two (Blu-Ray vs. HD-DVD) was incredibly annoying. I don't need or want four or five different Netflix style services. 

Choice is alright, but at the same time a lot of good people at Sega lost their jobs and a lot of great franchises and a great company went under basically due to competetion. If something even remotely similar is Nintendo's fate -- meh. I'll take the alternative please. 

Besides really how would the situation I describe in the OP be really any different from the competetive market we have now? The Wii U is sure as fuck not competing against the PS4/X1 in any realistic way, and the Vita is a complete non-factor. The competetive balance would for the most part stay the same, Sony/Nintendo just benefit by gaining several advantages in this set up. 

You want Nintendo to basically make another PS5/XB2 level machine next time presumably with a similar controller ... but really, who is that good for? Does the market want a third "me too" console? I doubt developers want it (now they have to make three ports of each game instead of two), and I don't think it would be good for Nintendo either. 

Nintendo need to do what sony did with the ps3 make new franchises theres alot of talent and imagination at nintendo let them of the rails, look at naughty dog have done, ready at dawn, bungie.

Nintendo yes a new mario kart & zelda, but not so many 2d/3d platformers as this genre doesnt sell well little big planet, knack, mario 3d  all sold poor.

I wish nintendo had bought rare back in the day things would be maybe diffrent now, hell the should get timesplitters 3 id buy one.

Nintendo doesn't need Sony at all. In the case of Nintendo ever going third party they'd play Microsoft and Sony out against each other. Nintendo doesn't even need the help of Sony for their handhelds.

The whole "Nintendo needs to do what Sony does" thing is past. 

The window for that is over. The core gamer market is either Sony or MS and Nintendo won't be able to change that nor would they be willing to take the enormous risks in competing head on with two conglomerate corporations that can ride out video games losses because they have 10 other divisions. 

Woulda, coulda, shoulda, yes they should've done things differently 10-15 years ago, but that train left the station a long time ago. 

Time to focus on what is best for the company's future today, IMO since they're not really making any headway against Sony anyway, why not make them a partner? It would make them more money, it would make Sony more money, and ultimately I really think it would be better for the game industry. The Japanese industry especially would benefit from a united front, it would also soldifiy the traditional game model in a sea of changing trends (most of which IMO are negative). 

hypothetical: hell freezes over.

Seems to happen once or twice every ten years in this business though (something unthinkable, unbelievable, etc.). That's part of what makes it a fun business to follow. Hell does freeze over. 

To be honest the Nintendo-Sega rivalry was always far more intense than Nintendo's competetion with Sony. These days Nintendo and Sony barely compete head on in any real way and Sony is even fairly complimentary of Nintendo, the freaking head of their game division is saying they need Nintendo to be successful for the industry sake. 

In the Sega-Nintendo days, in one passage of the Console Wars book higher ups from Sega and Nintendo nearly come to blows outside of a New York hotel, lol. Yamauchi was so incensed with Sega's gains in America that he publicly threatened to fire his own son in law (Minoru Arakawa) in Japan's largest newspaper for allowing Sega to paint the SNES as a kids toy. Now *that* was an intense rivalry. 

Today Sega is probably one of Nintendo's closest allies, lol. 

You don't think Nintendo games would give Sony an edge over Microsoft? We are talking about software in this context not hardware. 

This is not about whether or not giving Sony an egde over Microsoft ... 

This is about been a benefit for Nintendo or Sony! 

Sony gets little from this deal as the size of their console customer base is ideal enough as it is whereas Nintendo has nothing to lose on by putting their games on a console with a large userbase. For starters Nintendo doesn't have to take losses on making hardware like they did with the WII U plus there's a potential benefit for selling significantly more software too and what's more is that those are console games which have a much higher margins than their handheld games. Sony would get jack for making software on Nintendo's handheld since it's pretty clear the market doesn't value their handheld games. 

If anything there's more possible returns for Nintendo than there is for Sony in this ordeal ...

I think it's fairly even. 

Microsoft could flail their arms and try to bait Sony into price cutting/hardware losses all they want ... Sony would pretty much not have to worry about MS at all anymore. MS would not be able to launch a credible counterattack to Sony with Nintendo on their side. They would have all the best third party content and too many exclusives for MS to counteract. 

It would help the PS4 in Japan a lot too. No Nintendo IP on their own can't sell a console in Japan, but combine Sony's good third party support and Nintendo IP and you may actually have a console that sells reasonably well in Japan. Mario + Final Fantasy + Dragon Quest + Mario Kart all in one place generally tends to go pretty well in Japan. 

In Nintendo's good graces if they can score deals to supply LCDs/cameras/batteries for Nintendo handhelds, that would also sure help take the sting off losing their portable business. Shareholders would be very happy too, Sony's stock would definitely rise on this news. 

Perhaps Sony could also secure other Nintendo IP for things like movies too. Win-win all around. The only loser in this scenario is Microsoft. 

I think Yoshida and Hirai would react favorably if presented such a scenario. It would be good for Sony, good for Nintendo, good for the Japanese industry.

Microsoft is only putting up a fight in one region so Nintendo stepping in would only makes it moderately easier to win America ...

Japan is a lost cause as it is so I doubt the PS4 would gain much from it either ...