This is not changing much.
We already have a PS5DE or $399. This `PS5 Slim`, is in truth, still just the PS5DE but smaller, and with some sort of contraption that lets you attach a disc drive to it. This would actually be the first time that the introduction of a slim SKU, does not come with a price drop. Not only would Sony be making money on the actual console, but they will also be making a good amount off anyone that spends what I expect will be the $100 for the disc drive attachment. Though that can also come in at $70. Sony still makes something though, being that said attachment cant cost them more than $40 to make/package and ship).
I'll give you the digital sales spike though, I don't see a lot of people buying the disc attachment. And the long-term effect of that is, when the PS6 is released, being digital only with a disk attachment, will be the norm by then, almost expected.
As for Xbox sales, I sincerely think at this point that is a non-issue. PS5 is still maintaining the sale ratio to it that the PS4 had to XB1. What Sony needs to do is get the Ps5 down to $299. But with hwweVV it sells, and I fear that may never happen. We would sooner see games bundled with the slim at $399 than ever seeing the price dropped to $299.