The raison d'être of the entire Xbox product line has pretty much ceased to exist.
Microsoft got into the market because they thought the next stage of development in computing was the whole "battle for the living room". That personal computing would move from the PC to the loungeroom, and whatever device was under the TV would be the most important thing in the house.
They see Sony selling 100 million PlayStations and think it's a threat to Windows, because if people transition from the PC to 'set top boxes', they won't be running Windows and they won't be buying Office. So that's why Microsoft got into console gaming in the first place and why they were willing to spend billions pushing what by any metric has been a spectacularly unprofitable product line.
You could still see it in their Xbox One strategy - how much time did they spend during the launch build up talking about the set top box capabilities? Going back to the 360, it was definitely instrumental in the push towards apps on TV (Netflix, Hulu, etc, etc).
The problem is, while Microsoft is focusing on winning your living room they let Apple and Google win your pockets, which is where personal computing actually went to after the PC. Meanwhile, people can replicate all those functions Microsoft were pushing beginning with the 360 using $40 dongles, or even better, they're all just built directly into the TV. And they're running Android!
So a decade ago that division seemingly had a blank cheque to do whatever they wanted because it was seen as the future of Microsoft's core business (personal computing operating systems). Now, not only is it clear that set top boxes that control the living room are clearly not the future, Microsoft's actual core business has pivoted hard to enterprise. So the Xbox business can't be a loss leader any more. It needs to be run as a profitable business by itself. Obviously Microsoft think they can do this or they would have pulled the plug.
The question is how do they react after the Xbox One ends up selling something like 40% less than its predecessor. Is it worth it for the MAUs? I'm very curious to see what they do after the One X and if they launch a new device against the PS5.