MS is never going to compete against Sony going the way they are, Sony is predictably just going to easily pick them apart and colesce Japanese exclusives against them.

You tried MS, you tried for 15 years and largely you are stuck in the same rut as 13 years ago. Scorpio is not going to be a success at that price with the software proposition MS is offering.

Time to bow out of the console biz IMO, but keep your toes in to reap a few benefits. The deal:

- MS relinquishes control of the XBox brand and sales/distribution of XBox to Nintendo, but Nintendo agrees to keep "Microsoft" logo on XBox products in addition to Nintendo logo being added. 

- Nintendo agrees to support the XBox and Windows Store (and only Windows Store, no Steam) with a *few* of their IPs yearly. They don't neccessarily have to be new games, it is up to Nintendo to decide the level of support beyond a contracted number of games (say 4-5/year). Nintendo can continue making Switch of course and primarily supporting Switch. 

- In return, Nintendo will agree to use Windows OS on XBox (of course) AND a mobile version on Switch so long as it's not a resource hog.

- Nintendo recieves majority third party/royalties from XBox software with MS receiving a minority cut.

- MS' 1st party teams and Redmond Washington staff will continue to operate ... under Nintendo's wishes. Phil Spencer is kept to coordinate between the two in Redmond. 

- MS is allowed to keep the XBox Live service, which will be made available to Switch and XBox players. They handle the voice chat and all that, freeing Nintendo of any liability (ie: weirdo morons targetting kids online). They will handle the servers and all that, so Nintendo does not have to. 

- MS agrees to allow their IPs on Nintendo Switch as well as XBox (so Halo, Rare IP, Forza, Killer Instinct, Gears of War, etc.). 

Contract extends for 8-10 years, at which time both parties are free to renegotiate terms. 

if MS and Nintendo merge, they'll be better to bring up a new console rather than have switch and X1 create those versions to the each other.

What have you done...you're just hanging out fresh meat and the sharks will come!

No merger. Nintendo runs the XBox division, MS takes a backseat and can keep XBox Live as a service which Nintendo uses. 

No. The philosophies followed by Microsoft and Nintendo are diametrically opposite.

Microsoft forms partnerships with third-parties because they want to expand their platform and have it grow well beyond "games". They want Xbox to be a beachhead into the multimedia center of each user. It's all about services and subscriptions. They want to be a digital Wal-mart for multimedia, particularly in the west, especially in lucrative markets.

Nintendo only grows their platform because it's a way to sell software. They resist new industry standards and are slow to transition to new technical advances. They only care about forming partnerships where they reap most of the benefits and only really pay attention to the Japanese market.

No. The smartest thing Nintendo could do is let Xbox line die out and then buy up any ip that they want.

Nintnedo will never let that happen. Microsoft would stand to benefit more out of that relationship than they would. Not only that but the third party control that Xbox has is probabaly the primary reason to keep investing in consoles.

You have quite the imagination.

You can build a buffy specs console easily, if not very easily

But a hybrid machine like Switch, I doubt M$ could even imagine about it, and design a console like it

If Nintendo had third party on par with Microsoft helmed by by their second and first party, Microsoft would be in trouble.