Righting the ship properly into a more ideal situation was a journey that needed to start 10yrs ago and they've cocked it up at every turn.
I think it's fundamentally too late to achieve that ideal.
Now the plan is buy everything that already makes money, streamline (unfortunately they probably won't just streamline, but will break, extract and kill) and make more money in the short to mid-term..
Probably with a selection of break-even/slightly profitable halo hardware products (as in top of the line, not the games) that come in early before Sony/PS and capture enthusiast mindshare with some trickle down effect on the rest of the core gamer market. It won't be massive or win the market back, but it'll be a little bit of harm reduction and help maintain some physical brand presence. Then later on, perhaps some lower end SKUs to leverage that halo effect a little more.
Ultimately the core business strategy will be being a third party publisher. Though I fully expect them to slowly ruin that in the long run and the bulk of the portfolio will lose its appeal and crumble, if they're lucky a few properties will retain relevance/popularity and MS will just have all their eggs in a few very big baskets.
As for sticking an Xbox-approved APU in lots of OEM PCs, it'll work in a more legacy sense for access to existing libraries, but I can't help but think that gamers will largely choose Steam, GOG and even Epic over Xbox whenever possible, to buy their games going forward. Which drastically eats into the cut MS would otherwise get, entirely so on non-MS games and to some extent on MS games.
I also think if a dev can address the bulk of the Xbox market via steam/epic/gog with a generic PC version of the game, then they're not gonna be inclined to even make a distinct Xbox version. Maybe it's not quite as optimised but I don't think most devs or publishers will lose sleep over it. It'd probably make more sense just to do PS6, PS5 & PC/Xbox PC via Steam/GOG/Epic and not fuss with developing for Xbox specifically, the install base for their main console SKUs is unlikely to be big enough to justify it; especially if I can address those boxes and customers via other storefronts too with the same PC code (which it sound like they're working towards?).
In the end I think they're gonna end up with a small install base of Xbox Consoles and a larger install base of OEM Xbox PCs -- both addressable via all storefronts -- and no one other than MS studios will be making Xbox-specific games for them unless MS throw enough money at them to get it on Game Pass; and the total is gonna have to be enough to cover the additional dev costs of that particular software SKU and then some on top to justify it. As for MS' own games, they'll largely be favoured on other storefronts if they put them there and they're gonna lose revenue to those storefronts getting their cut.
It doesn't quite add up, unless they perhaps see the writing on the wall that they've missed their opportunity to dominate the market in a more conventional sense and they're willing to take a hit on revenue cuts to sustain their place in it; as it may be better being in the market than not.