With one basic console made in different variations that can all play the same games, Nintendo would essentially double if not triple their potential customer base for software sales.  Not to mention they could still produce their own version of this one console, or their own add-ons and make money off of those sales.  Most of the money would be made off of software, where everyone knows that's the biggest money maker anyway.

I agree it may cause some confusion when making the decision from say 12 different variations of the same console, but the consumer would no longer have to worry about which games work and which friends he will be able to play with, so in the end regardless of what they choose, they will be able to do these important things no matter what.

This is why the PC is so successful and if consoles really want to take a jab into the PC's huge gaming market, this is the way to go.

Im an opinion whore, I make threads because I think the discussion might be funny or interesting or whatever. Furthermore there is plenty of market share to go around, but the market itself is changing. As online becomes more important, not in the content delivery sense, but in the connectivity sense theres a greater need for people to be able to connect and play games with each other. Its completely impractical for myself to play online games on both the PS3 and Xbox 360 and maintain a friends list on both consoles. Once a big enough bloc of people are inline with one console the rest of the offline market would fall in line behind that market share. This is probably Nintendos biggest weakness at present.

Also, by different variations, I think he just means colors, and advanced functionality. It is not going to be like a PC where the RAM, gpu, cpu, etc would be different or upgradeable. This one console would use the same basic hardware (cpu, gpu, ram, hard drive, one standard and one motion controller), but manufacturers could use their own design, cooling system, decide whether or not to include an optical drive (download all games), whether or not to add in multimedia functionality, etc.

With the exception of Nintendo who still only makes a small amount of profit per console sold, the consoles are not designed to be the money makers. Add-ons and software are where profits come from, and with one unified console with a 230+ million userbase that gives software developers a lot better chance of succeeding. Even if their game is a flop and only sells to 1% of the userbase, that is still 2.3 million copies sold (instead of just 300,000 had it been on just the 360 for example). Not to mention the development costs would be much lower so all software companies would have to sell less to remain profitable in the first place.

 Yeah, double friends lists is inconvenient. I guess the two HD consoles should merge in some kind of partnership and release a console they co-op developed. PS360 is pretty much the same thing.

But Nintendo has always been unique. So at least a two console market is minimum it seems.

No way. Multiple businesses brings competition. If there is only one, they could do whatever the hell they wanted and it would be a monopoly. With what you are saying, another company wouldn't be able to rival them to keep them straight? That is just insane. If you don't like one console, you can buy another. But if there is just one and you don't like it then you luck out.

You know, that actually makes sense. I've finally figured out why people think that this would actually be a good idea. Thanks!

EDIT: Just to avoid confusion, I'm being serious. That really did help me. ^_^

@OP
I partially agree, but I don't believe the controller should be the central part. The only real difference in gameplay from the NES to Wii from all consoles was essentially the improvement of the controller. You can find Metal Gear on a NES, sneaking, shooting... while the gameplay is refinded and the graphics are updated the game model is essentially the same. So the interaction with the game is the only that fundamentaly changes. By buttons, camera, pointer, tilt, motion.

I do agree however that games design itself is suffering due to this separation. Companies are indeed wasting time and money on different machines, new engines, figuring out how to take advantage of ability X than they could be spending times improving and building up. Take inFamous and Assassins Creed as excellent new forms of terrain traversal. The core game play engine works on all machines, but rather refine and improve them they customize them and make sure they work on the machine. If engine could work on all machines right from the beginning then the devs will stop wasting time. More so with AC than inFamous.

We do need a standard, but it shouldn't be in the controller or hardware, but the language and format of the software. If that were the only difference between all the consoles then all 3rd party games could appear on all machines. Only the graphical resources would be upgraded or down graded as need be. This would increase developers profits. Resulting in more and better games.

Edit:

The reason why PSN and Live gamers can't compete with each other is because console developers are lazy. PC developers never felt it was the manfuacturers responsibility to provide online. As such a PC server could service everymachine out their. I could in theory produce a NDS homebrew Asteroids multiplayer game that plays against a PC player with the same game. Then port it over the PSP, PS3..... Why can I do this, because i'm not using the console manfuaturers online service. If you want to see a smart company look at Disney. They took it into their own hand to create DGamer. Ok I'm not interested in their games, but DGamer only requires 1 user account across all DGamer games. This in on the NDS too. So don't get on console manfuacturers cases when it's the console developers lackluster work.

We wouldn't be where we are now if it weren't for all the different companies and consoles. Nintendo, Sega, Atari, Sony, Microsoft. If Atari would have been the only game company, we probably wouldn't have all the Mario, Sonic, Halo, Final Fantasy, etc..

I agree with the OP. DVD had no competition for quite some time. Competition still took place, it just wasn't as open to us, and we didn't care. The competition was in the quality of the movies themselves, not the movie players.

no more competition means more innovation. God forbid we are still stuck with the NES. Because theres not competition there would be no reason to build a new console EVER!

THis would be the worst idea ever f you think about it. Competition is best for Gamers