I don't think the hardware is the issue. Series X is a powerful, beautifully designed piece of hardware that should be able to match PS5 price points when optimised.
The real issue is the absolute lack of differentiation to previous generation, poor branding and lack of compelling exclusives.
Microsoft tried to obfuscate the difference between generations with the result that people didn't feel compelled to upgrade. Then they had to fess up that the new games don't work on previous generation of consoles, so they put a Series X logo on the boxes. But they also have Series S, which often is not seen on boxes. While Sony has had iconic, high quality exclusives that have inspired people, Microsoft has mostly neglected or mismanaged its big franchises, Forza aside.
The only good thing they have going is GamePass, that would be a real differentiator and innovation, would they have the exclusives Sony has.
I own two Series Xs and one Series S. Last time they saw action was Elden Ring, and I am now hoping I started that on PS5. Other than that, I have not really felt compelled to fire mine up.
tldr - the hardware is not the problem, its' branding, innovation and games
Look at this terrible fucking branding. It says Series X twice. Once with even its own logo and once with a text. Series S is not mentioned once, even though ostensibly it is the most sold console SKU.