Which is why it's makes no sense they're even planning another console. This one foot in and one foot out approach they've taken with Xbox is why it never takes off and only loses them money.
MS sells gamepass at full price on Xbox. Nearly everyone who gets an Xbox will participate to some extent in gamepass.
If MS gets rid of Xbox then it will only have PC/IOT users that can access gamepass. Gamepass adoption on PC has been tenuous, for example MS charges less on PC for the service vs console. PC users also much more likely to interrupt the service on months they don't use it. Currently without console subs it is unsustainable. Difficult to visualize significantly quickly increasing gamepass subs on PC if you are Microsoft and you no longer have the console buffer. Gamepass is trying to be semi-self sustainable and needs to generate more money per sub not less.
MS has plans to kill off Steam and take over the PC space. However, if they got rid of their console today they would only kill off gamepass. They believe more time with console cycles will allow them to better position themselves in the market and keep gamepass alive until they are in a position to take on Steam.
The issue is that people have stopped buying their hardware. It is still unknown if there is a loyal fanbase that will buy the next one. If not, perhaps they can offer a competitive advantage. The best idea they have been able to come up with so far for competition advantage for next hardware:
1. Allow Steam on the device(I shit you not, despite all of the above they want to use steam to promote their next console)
2. "largest technical leap"
3. Portable Switch Clone