Xbox existed to be leveraged into living room domination rather than to beat PlayStation. As soon as they found a level of success the focus immediately shifted away from games as a focus.
When Nadella came into power it was also clear that their goal was to break away from being console dependent. They were always thinking bigger than just overtake PlayStation.
Xbox basically wanted to be everywhere. They wanted to be Netflix. A brand that isn't associated with a specific piece of hardware and exist everywhere. Them putting everything on PlayStation might be shocking to traditionalist but looking back the signs were always there. When Keystone was cancelled that was telling.
Pretty much, and thats the thing that makes me go

at Sony stans.
They don't know or care about the history but consistently want to talk about the history. Xbox is only around because MS didn't want Sony encroaching on the PC space and so that they could become more of a household name. They are still "the bad guys" and will always be as long as they are trillion dollar machine.
They came into the gaming industry and disrupted the status quo, from adding ethernet ports, to online profiles, stores and dlc/microtransactions, and the XB1 was suppose to continue that trend, however they fumbled that so bad that they got bullied into axing everything that would have made the xb1 a disruptor and just tried to out Sony and Nintendo at console gaming when they are at the heart of gaming consoles They gave it a shot, and its not happening.
Fast-forward gamepass, play anywhere and then again to now and them not having beef with making a game for PS/Nintendo and it again disrupts the whole industry. This time heavily in their favor tho, MS was never trying to make money off selling hardware aka consoles.... that was never the goal. And tbh it's not the goal on Sony nor nintendo. Traditionally it was just easier to make money on the software side by having more hardware sold.
For Sony and Xbox The consoles were a way for them to push other products they created, like CD's, Blu rays, Blu ray disc...etc etc. Even back to the Nintendo CD