In the early days of Xbox, Microsoft had no idea what it was doing. So it tried to throw its billions around and buy up companies that had experience. Nintendo was one such company, but instead of selling, they just laughed.
In Bloomberg's excellent history of Xbox article, key Microsoft executives talked about Xbox's humble beginnings. The content is filled with lots of surprises like Microsoft trying to buy out EA, Square, and even Nintendo. Needless to say that nobody sold, and in response to the offer, the staunchly conservative Japanese company practically laughed Microsoft out of the room.
"Steve Ballmer made us go meet with Nintendo to see if they would consider being acquired. They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went," ex-third-party Xbox exec Kevin Bachus told Bloomberg.
To be fair, Microsoft's argument was pretty insulting. The acquisition offer was predicated on Nintendo's hardware being inferior to Sony's. The idea was to buy out Nintendo and have them create Mario games for the newer, beefier Xbox console that was on the horizon.
"We actually had Nintendo in our building in January 2000 to work through the details of a joint venture where we gave them all the technical specs of the Xbox,. The pitch was their hardware stunk, and compared to Sony PlayStation, it did. So the idea was, 'Listen, you're much better at the game portions of it with Mario and all that stuff. Why don't you let us take care of the hardware?' But it didn't work out," ex-head of Xbox business development Bob McBreen said.
Not much has changed for Nintendo. The company puts fun gaming experiences and innovation ahead of high-end specs to this day. This emphasis on innovation has resulted in Wii-like earnings surges with the Nintendo Switch, and 2020 should be the console's best year yet.
At the same time, the Xbox brand is titanic right now, replete with a complex and lucrative ecosystem of hardware, software, and services. Nintendo, on the other hand, is no slouch: In 2019, Nintendo earned $12 billion and outpaced Xbox's $10 billion annual earnings.
History would've been very different if Nintendo had sold to Microsoft.
This is one of those "what if" moments sort of like the Nintendo PlayStation prototype made in the early 1990s. It makes you wonder what the industry would be like if Nintendo and Microsoft were one entity.