What people don't realize is that Xbox is pivoting here as Nintendo pivoted. And similarly, they're pivoting towards their strength.
They acknowledged they weren't going to outconsole Sony and Nintendo. That's a quote from Phil (brushed off for reasons).
Microsoft knows that they're early to the market on cloud, but that cloud is likely the future. Sony realizes this as well and they're focusing more on the backend. They've yet to go all in. Cloud streaming is on PC, but not Mac, iOS, Android, SmartTV, PS Portal. I think PS Portal will be the first to get PS5 streaming, because Sony wants more control over your streaming experience, i.e. to buy a PlayStation product. I think we'll see PS streaming via Android, since Sony's strategy is clearly so Android focused. PS Portal runs on Android and Sony TVs run on Android TV.
Again, the only difference is Sony is taking their time, while Microsoft is clearly making a strong pivot because they've already acknowledged that their hardware sales are in decline.
Microsoft isn't selling enough hardware, software, or subscriptions to justify staying on course.