If I were Microsoft and I wanted Xbox to have a Nintendo Switch like success, I wouldn't just try to make a PlayStation clone. Xbox is made by Microsoft and they make Windows. Best way to make Xbox hardware unique (like Switch hardware is unique) is to let Xbox run Windows. Full Windows 10 with Windows store, Steam, Epic store, EA, PS store, and apps like Office, Adobe, CAD, etc. Target PC gamers on budget, or the pre-built market, or get streamers to use it, etc. (And sure they could also make console versions that are just regular Xbox consoles.)
Imagine the Xbox Series X Windows Edition
Windows 10 OS
8 Zen 2 cores @ 3.8 GHz
52 CUs @ 1.825 GHz
16 GB DDR4 3200 MHz
10 GB GDRR6 @ 560 GB/s
1 TB NVMe SSD @ 2.4 GB/s
1 TB SATA HDD (backup storage)
no disc drive
Display port 1.4b, HDMI 2.1
USB-A x3, USB-C x2
~ 325 W PSU
Good luck building that spec gaming PC for less than $1000. If I were Microsoft, I'd take Series X, reconfigure the memory and ports to be more PC like, and let the thing run Windows. Sell it for like $600. Easy way to be unique and different from PS5.