I don't doubt that for a time, both console manufacturers would have looked at ARM chips instead of x86 to be used in their consoles. They'd be even cheaper, and use even less power, than what they're going with. So they probably did talk to nVidia. But once they realized that either ARM just wasn't going to be powerful enough, or the developers would rather code in an x86 environment, then the talks with nVidia ended. Basically, if nVidia could have put Tegra in this, you can be damned sure they would have chased this low margin market. They couldn't, hence the sour grapes level commenting of how they didn't want the contract anyway.
Also, people keep bringing up cost being a limiting factor, but almost no one is talking about power being an even more limiting factor than cost. The reason they're going with a 7850 (or, more to the point, a slightly underclocked m7970) isn't necessarily because anything else would be too expensive, it's because anything else would use too much power, seeing as the console as a whole has to come in at about 200w or less. The biggest reason they're not using a high-end part with these consoles is that the power requirement for high end parts has gone way up since the 360 and PS3 came out in 2005-2006.
Also, people keep bringing up cost being a limiting factor, but almost no one is talking about power being an even more limiting factor than cost. The reason they're going with a 7850 (or, more to the point, a slightly underclocked m7970) isn't necessarily because anything else would be too expensive, it's because anything else would use too much power, seeing as the console as a whole has to come in at about 200w or less. The biggest reason they're not using a high-end part with these consoles is that the power requirement for high end parts has gone way up since the 360 and PS3 came out in 2005-2006.
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