Well, they got us Marvel Tokon with Arc System Works developing, so they aren't a lost cause.
Sony, I mean.
It's not going to be a "console". It's going to be a Windows PC optimized more for gaming (preferably beyond what these ROG Xbox devices can do currently) and BC with as many Xbox games as possible (maybe through an extensive emulation or translation layer).
You're thinking about a "console" to go up directly against PS6. That's not happening anymore.
When rumor of this stuff first start like 18 months ago, I thought it'd be MS integrating more Windows compatibility (locked down and abstracted through some hypervisor layer) to Xbox OS, because they already started that to an extent with Dev Mode.
Instead it's more like they're doing the opposite: bringing Xbox features & compatibility to Windows. They're probably toying with the thought of doing both but in actuality, they'll have to choose one or the other. And I think those next "traditional" Xbox devices are going to be more of Windows with Xbox features/compatibility added, including for BC.
It's not going to be a "traditional" system like Series X & S though. It won't be subsidized or competing at volume with PS6 and Switch 2, there simply isn't enough of a customer base for Microsoft to justify that aspect of a console strategy any longer.
The sooner people accept that the sooner they can accept those next "traditional" Xboxes are going to be hybrids with lots in common with this ROG device and devices like it.