PS4 selling like a beast yet with none of the big hitters uncharted, god of war, gran turismo. Wii u mario kart smash, pizzaface, gonetothemoon 2 chicken belts. Sony doesnt need em. 

Because if they accept the deal they will support HDS instead if concentrate at ps4 and ps5

Nintendo won't be fine if smartphones continue to eat away at the handheld market. I don't really even think we've seen the bottom yet. More and more kids are growing up without a Nintendo handheld. 

Sony's Mr. Yoshida had this to say:

"I think Nintendo and us are pretty much in the same group," Yoshida said. "We need Nintendo to be very successful, to help induct as many consumers who like to play games with controllers, right? With sticks and buttons. Because we believe they are great things."

Iwata also recently stated that while there are differences between Nintendo and Sony/MS, they are in effect in the same group, whereas the "other" types of gaming options are really not. 

Nintendo and Sony really are not enemies anymore. They are fighting a war against non-traditional gaming that is eating away at the industry and has already decimated the Japanese game business and is spreading through the portable industry like a cancer. It's already claimed the Vita, and Nintendo's going to sell 70-80 million fewer handhelds this generation. Can Nintendo afford to lose 30-50 million more consumers next cycle? 

At what point do you say enough is enough?

In my opinion it's time to unify and fight back. 

some years latter, when both nintendo and sony shrink to pretty low levels, i can see they merging, building a single console that runs all games.
The controler could be different

Your point about a healthy business is quite right and that is exactly why I don't think it will happen. One or the other will be undermined which will be bad for the business as a whole. Unfortunately this is the more common case when partnerships like this happen when it isn't from the foundation. 

The Wii U isn't over 10 million and the 3DS was a massive decline.  If the next handheld declines again they most certainly need help.  

Exactly. Sony is not Nintendo's enemy any longer. They are just ships passing in the night. Unite and fight. 

Don't wait until your marketshare is down to 30-40 million handhelds Nintendo, that could very well be where we are headed. 

Mobile won't stop until its destroyed the handheld portion of gaming entirely and brought the Japanese industry to its knees, until the business is nothing but hyperviolent shooters on consoles and candy freeware on phones. Even Yoshida at Sony has said he is dismayed by lack of color in home console games and was pleased to see Splatoon at E3. 

Unite and fight. 

;)

And look how bad 3ds total software sales are. Imagine how bad it will be if they decline a lot again. 

What are the total 3DS software sales, anyway?

i think people take the whole shrinking Japanese market thing too far. Even if the market shrinks to a 5M sold consoles per generation market its still not bad at all. That after all is how sales has been in every other tier 2 country in the world so I don't see why itvwoukd be bad for Japan. it just means that they would have to make sure they publish their games internationally and not just locally. life will continue just fine. same money, different approach.