I know there's litte likelyhood of this happening, but...

If Nintendo completely runs away with this generation and completely outsells the PS3 and 360 combined, what are the chances of MS and Sony forming a partnership?  What are the barriers to such an undertaking (aside from ego)?  Surely, there are people at both companies that have considered this possibility at some point or another.  It could even come in the form of one side buying out the games division of the other.

Why can't Sony manufacture the hardware while MS provides the OS and other software/programming considerations?

I bought a Wii to go with my PS3 instead of buying a 360 (RROD aside) because I saw owning both HD consoles as somewhat redundant despite some software exclusives.  If it weren't for the Blu-ray playback in the PS3, it would have been a toss up for me as to which HD system to buy.  How many other people have the same perception of redundancy?  Should MS and Sony consider working together?  Sure, more competitors on the market has its benefits, but unity would give a greater number of people access to a greater number of games.  Nevermind the fact that development cycles could be shortened and better products put forward without the shackles of multiplatform development.

Next gen should be Nintendo vs. Sony/MS.

not gonna happen, there is better chance of MS helping nintendo than merging with sony

That would be detrimental to them both. After all, they're only in the gaming business to undermine/block one another. Neither of them care about video games all that much, save as a means to an end. In other words, I don't see it happening.

Not in a million years.
Nintento in itself is a gaming company, M$ and SONY are multimedia companies that have video game departments.
it doesn't affect M$ and SONY if their video game department got overtaken by Nintendo.

 Yes, but I think both sides understand that those "jabs" are how the game is played.  It's business, not personal.  I don't think there's any actual "hate" there.  Take for example the guy who left Microsoft to head up EA.  He now develops PS3 games obviously.  It's just a job.  If the 2 sides felt there could be a good symbiosis, it would happen.  The problem is actually finding that middle ground that makes everyone happy.

They would actually make more money if they worked together, I.E both spun off their gaming divisions and they merged them into one consumer electronics division. 60/40 split ownership with Sony holding the majority.

 Exactly!  No more having to dish out cash for exclusives.  Less marketing necessary trying to undermine the "other guy".  Any number of factors could be money savers.

 Nintendo got Sony into the gaming business in the first place and then screwed them over.  Rather than pissing away all of that work, Sony developed the PS1.  I'm not so sure that Sony would have tried otherwise.

It never happened last gen.

Hahahahahahahahahahahahahahahahahahahahahahahahaha. Thats funny.