That's a incredibly biased way of saying a business deal feel through, Nintendo went to a competitor, and Sony decided to prove Nintendo made the wrong choice and stay in the market

This humiliating turnabout enraged Sony president Norio Ohga, but though it seemed sudden from the outside, problems had been boiling between the two companies for some time. The main issue was an agreement over how revenue would be collected – Sony had proposed to take care of money made from CD sales while Nintendo would collect from cartridge sales, and suggested that royalties would be figured out later. “Nintendo went bananas, frankly, and said that we were stepping on its toll booth and that it was totally unacceptable,” explains Chris Deering, who at the time worked at Sony-owned Columbia Pictures but would go on to head the PlayStation business in Europe. “They just couldn’t agree and it all fell apart.” - https://web.archive.org/web/20140206193956/http://www.edge-online.com/features/making-playstation/

Nintendo broke their contract with Sony. I think it's obvious that they messed that one up. What could have been right? Competition is good.