Hiko, i have been a Steam user for decades and to this day, with or without competition, they have done everything that supports me as a customer. You don't need competition if you can have faith with the company. Sounds weird I know, same can be said for Nintendo. The issue is MS and Sony clearly cannot be trusted and will run away with everything if they can. As a business standpoint, I don't see the need for a 3rd platform and to MS it's only a money drain just to sell subs. 

Xbox will still make controllers and still make games, its just the dedicated hardware the business needs to justify. 

You need to play 4D chess here. 

Sony won't allow GP or any Subs from MS to appear on PS, as long as they have to compete with Xbox hardware.

If MS drop the hardware front and give Sony full reigns on hardware creation, then Sony would allow a modified GP service. They won't turn down the opportunity of quality IPs because it will further boost their own hardware sales.

MS will always be a threat to Sony because Sony has a service just like GP called PS+ but one thing it does not do is day one release of their own games.  GP directly competes with Sony services so why would Sony let such a service on their console that would compete with PS+.  Second, Sony also have a cloud platform in PS Now that is part of their premium subscription just like XCloud is part of MS ultimate sub.  This means that GP on all levels competes with Sony and their services and there is no incentive to let MS run their services on their platform to compete with PS+.

Sony also will have an ambition to enter more Cloud based services or expand their own to multiple devices.  Your point only look at today but I never got the feeling that Sony would not want to enter those markets, they are just not moving as fast as MS because they have a commanding lead in consoles.  MS whole plan is disruptive to Sony and how they want to move and how fast they want to do it.  So no, advancing MS strategy and accelerating their ability to expand beyond consoles is not a benefit to Sony and no incentive for them to allow GP on their platform.  As far as Sony is concerned, they would be a much happier company if MS left the market period then having to worry about what other disruptive things a trillion dollar company can do to unseat their market position.  By the time Sony is ready to compete in the device market, they could find themselves way behind MS which is not a scenario they want to be in.  

If you kind of think about it Sony has been more reactive to MS then proactive when it comes to anything not hardware related.  They were more reactive to putting games on PC, reactive to expanding PS+ to compete with GP and they are still reactive to driving into the devices market because it marginalized their console.  This is why they really fought hard to block the ABK deal.  Their just isn't any benefit to accelerating MS goal for Sony and they they would need to react to it but at a less financial base.

Also there is nothing stop MS from putting games on PS platform even today.  You forget that if MS want to they can still publish Bethedsa games to PS if they desire.  We are not talking about MS putting their games on PS, we are talking about MS putting GP on PS which is something totally different.

Even if Sony bought Gaikai much earlier than MS considered GP they really haven't put much effort into it (be it marketing, servers, content) before GP started to get traction.

True Sony has not put that much effort in PS Now because it did not take off.  Pretty much the same reason why MS chose to make XCloud part of GP Ultimate and a add on because the business isn't there to sustain the service on its on.  That goes for GP as well, while a very good service, its no where close to being able to sustain itself on its on and Ryuu makes so big points on that as well.

I'm not sure on PSNow if Sony didn't put money because it didn't take off or if it didn't take off because Sony didn't pour enough resources.

For GP I would say that MS willing to put a big bet on investing heavily on it to put a lot of content have accelerated GP a lot even if the streaming at the moment isn't the core of the purpose (well TVs are starting to offer GP app on them, but the standalone stick or more TVs will still take couple years perhaps).

Not sure that if at the time GP have a sustainable model (because even if not at loss it would be growing without being fathered by the titles that are subsided by other areas of MS) Sony will have time to react fast enough to keep relevancy on streaming/renting model.

The current Console industry is full of bad competition. Xbox hardware is not needed.

MS will always be a threat to Sony because Sony has a service just like GP called PS+ but one thing it does not do is day one release of their own games.  GP directly competes with Sony services so why would Sony let such a service on their console that would compete with PS+.  Second, Sony also have a cloud platform in PS Now that is part of their premium subscription just like XCloud is part of MS ultimate sub.  This means that GP on all levels competes with Sony and their services and there is no incentive to let MS run their services on their platform to compete with PS+.

Sony also will have an ambition to enter more Cloud based services or expand their own to multiple devices.  Your point only look at today but I never got the feeling that Sony would not want to enter those markets, they are just not moving as fast as MS because they have a commanding lead in consoles.  MS whole plan is disruptive to Sony and how they want to move and how fast they want to do it.  So no, advancing MS strategy and accelerating their ability to expand beyond consoles is not a benefit to Sony and no incentive for them to allow GP on their platform.  As far as Sony is concerned, they would be a much happier company if MS left the market period then having to worry about what other disruptive things a trillion dollar company can do to unseat their market position.  By the time Sony is ready to compete in the device market, they could find themselves way behind MS which is not a scenario they want to be in.  

If you kind of think about it Sony has been more reactive to MS then proactive when it comes to anything not hardware related.  They were more reactive to putting games on PC, reactive to expanding PS+ to compete with GP and they are still reactive to driving into the devices market because it marginalized their console.  This is why they really fought hard to block the ABK deal.  Their just isn't any benefit to accelerating MS goal for Sony and they they would need to react to it but at a less financial base.

Also there is nothing stop MS from putting games on PS platform even today.  You forget that if MS want to they can still publish Bethedsa games to PS if they desire.  We are not talking about MS putting their games on PS, we are talking about MS putting GP on PS which is something totally different.

If it's bad competition...

We wouldn't get progress.
And considering we get a big jump in progress every generation, your statement doesn't hold water.

Xbox hardware is needed, it keeps Sony and Nintendo humble and mindful of consumers.

We have Competition. Nintendo and Sony.

MS will always be a threat to Sony because Sony has a service just like GP called PS+ but one thing it does not do is day one release of their own games.