What really surprises me is that according to their version of events, Nvidia showed Sony the door when they were approached for the console development, handing it to AMD because "profits are too low."
See, they can easily work on scaling up Tegra 5 and offer the same deal as AMD - a octo-core chip with embedded graphics equivalent to either a GTX660 (PS4) or GTX650 Ti (Xbox One), with licensing done through Nvidia who sorts out all the manufacturing for clients who want specialised designs, heavy emphasis on games getting boosts by using Kepler, bla bla bla. In fact, that would put Nvidia in exactly the same position as AMD with all the of the same benefits and opportunities.
By handing over the reigns to AMD, this makes it exponentially more difficult, but not impossible, to get into the generation after this. But I think, and hope, that this was their plan all along.
My theory is this: from now on, with both companies offering an APU-sort-of-deal, they lock Intel, IBM and anyone else out of the console market. Both companies can take it in turns to secure consoles and keep the graphics market alive while using their strengths in consoles to boost their respective markets - Tegra for mobiles, tablets and handhelds and AMD's GCN-packing APUs for desktops, nettops, laptops and HTPCs. Its a win-win for both of them and the two together can try stave off Intel simply snapping up everything with their processors and Iris graphics.
It would also mean that it would be possible for Nvidia to offer its own version of Mantle and both companies support and work on their API. Document it nicely, make it easy to code for, and they'll lock Intel out of higher performance because they'd have to stick to DirectX. PC gamers, console owners and mobile gamers would all benefit from a collaboration like that.
