How Microsoft Can Turn Around their Software Lineup:
1. Move Halo and Gears into Q1/Q2 release schedules. Stop competing with CoD, BF, and Destiny for Holiday sales. Use the first half of the year to own the narrative and let the same third parties everyone gets move hardware at Christmas.
2. Broaden the library. Bring back Fable. Don't outsource it, go snipe talent away from CDPR, Guerrilla Games, etc. and start a new European first party studio that builds the franchise back up. Make use of all the great IPs you're sitting on. The Elder Scrolls games make bank on the Xbox platform and Borderlands did damn well too, Shadowrun could be skinned over either basic mechanic and excel, both have multi-million person audiences who are starved for new games too. Get more productivity out of Rare's IP catalog, Conker should be a recurring staple of the system as an action platformer in a similar vein to Ratchet and Clank. I'd argue Kameo should get more love. Bring back Perfect Dark as a character action/espionage game. Go find someone in charge at Ubisoft and tell them you're teaming up to bring back Splinter Cell as an Xbox exclusive closer to the original trilogy (quadrilogy?) roots.
I could go on. MS has a rich history in this industry, they need to make use of it.
3. Make Windows Store games less shitty. For starters fix your goddamn ports or something, these games should not run as poorly as they do relative to the hardware in the original XBox One v. what they take to run on PC. Second give up on making people pay for online. Let them have the online free and sell XBL via the quality of additional services, like subscriber games services, sales, etc.. I know that last one won't happen because they're drunk on the profitability of XBL, but that's a short term thing if they can't gain better consumer respect for their Windows marketplace.
I'm not even saying to release on Steam here, but bridge the quality gap. And probably strongly consider sacrificing some potential profit to undercut Steam's fees to publishers and gain some allies with a professional, well ran, and reasonably curated marketplace.
4. Deliver a clear hardware vision. Just come out and say that you are a post-generation company and that ultimately the Xbox line will just be HTPCs with a streamlined OS shell. Make that OS shell publicly available and let people build their own even. You'll sell more of the profitable products (controllers and games) and have to spend less money on the less profitable products (console hardware).