I don't think the console is causing major losses so why would they. They could still innovate in ways that sony can't like dual boot windows and xbox.
Business don't operate solely on losses. If it isn't making
enough profit, then a product can still be cut.
The Xbox Series sold the most units at launch (that's Year 0 on the graph), but halfway through its lifecycle it is on par with the Xbox 360. You might think that is good since the Xbox 360 is widely regarded as the best console Microsoft has released. However, there were between 30-45 million console gamers worldwide in 2009 (Year 4 for the Xbox 360), while there were between 168-268 million console gamers as of 2024. This means that Microsoft met the same number of sales with the Xbox Series consoles as a nearly two-decade-old console did when the older console had less than 18% of the total worldwide console player-base that the Xbox Series consoles have.
NOTE: The approximate console gamers is a much wider range now because there are vastly more consoles sold overall than in 2009, and there is far more overlap - meaning people will purchase more than one of a single type of console, and/or more than one console brand.
This chart looked like progress until the Xbox One's end-of-life. At this point we see a regression. Since Microsoft has shareholders that they have to answer to, staying in the hardware market would be a tough sell without some major plan to bring people back. And since exclusives no longer seem to exist with Microsoft, I don't see how they could convince more people to purchase an Xbox (a real Xbox, not the, "My watch is an Xbox," nonsense). The people who have a large Xbox library AND who don't want to migrate to PC gaming (people like
adamsapple
for example) would likely continue to buy the same hardware so long as their library remains playable, but Microsoft has to get new gamers to purchase their console. That's the part where I don't understand their vision. Nothing they are doing
appears to be heading towards a position where Xbox (the hardware, not the brand) will make a resurgence. It
appears that they are heading towards being a third-party publisher.