Microsoft has had some wins with Xbox over the years (the Xbox Series X is my favorite home console of all time, and the game output in the Xbox 360 era was awesome), but they have managed to screw up a lot of basic stuff that put them behind the competition. The majority of Microsoft's issues with Xbox comes down to them making retarded decisions that turned people off, myself included.
Whoever greenlit "Xbox One," followed by "Xbox One S," "Xbox One X," needs to be incarcerated. If I'm ever talking about the original Xbox I have to specify "original Xbox". Beyond communication, so many parents got their kids the wrong Xbox console because of the stupid naming structure (and people selling their old Xbox consoles on Craigslist, eBay, and Facebook Marketplace took advantage of that confusion). I actually like the "Xbox Series S/X" naming convention, but they're pulling a Nintendo where they have to come up with something unique every time. This will potentially result in increased confusing down the line. To contrast this, I don't know of a single instance of someone being confused by which PlayStation to get. The naming convention might be lame (not even "might be" - it's completely lame), but everyone knows exactly what you're talking about.
And let's not forget the absolute trainwreck that was the Xbox One reveal. It was like they were actively trying to lose their player base. They spent more time talking about the Xbox One as a multimedia device than they did talking about actual games. To call it tone-deaf would be an understatement. People buy video game consoles for, you guessed it, video games. What a shocker. On top of that, the times they did talk about games, they basically told people they hated them and to suck nuts. Threatening always-online DRM, the Kinect built-in (which also increased the price) that was always watching you and you couldn't disable it, and the arrogance of Don Mattrick who said, "We have a product for people who aren't able to get some form of connectivity. It's called Xbox 360." That smug bastard pissed me off.
By the way, the Kinect that was forced into the launch bundle (which made the price higher than the PS4) was basically abandoned a year later. So if you were one of the people who bought in early, you got screwed. Well, more screwed. You were already screwed because of the price. Then you were screwed because that price turned out to be more of a waste than original thought.
They also completely dropped the ball in the Japanese and Asian markets. Xbox has never had a strong presence there, but they didn't even try for a long time. Meanwhile, PlayStation and Nintendo were doubling down on Japanese games, which meant JRPG fans and anyone into niche genres had no reason to pick up an Xbox. Microsoft just didn't make the effort. On top of that, people who love JRPGs noticed that the Xbox One was a step backwards. During the Xbox 360 era, Microsoft had increased its RPG/JRPG footprint. Lost Odyssey is still one of my top 10 games to this day. But with the Xbox One, they abandoned that particular ship.
Even now, exclusivity is a mess. They say something is exclusive, but it's also on PC day one, and major titles are coming out on PlayStation either at the same time of the Xbox release, or shortly thereafter. Cool for PC and PlayStation gamers, but it kind of kills any reason to own an actual Xbox if other devices can run the same games, including your primary competitor. Sony and Nintendo understand platform identity (although it seems like Sony might be dipping its toe in the same waters that Microsoft is in), but Microsoft seems to have given up. There's no clear reason why someone needs to buy a future Xbox.
Game Pass is the one thing they really nailed, but I don't consider that to be a good thing. It trained people to wait for games to hit the service instead of buying them. Redfall was hyped to hell and ended up being a wet fart (and I feel like I am being generous with that description). Halo Infinite had a decent campaign but launched with half of its promised features missing. If you're going to spend billions acquiring studios, you've got to deliver, and Microsoft has an aversion to properly managing studios and consistently releasing good games. They actual seem to be on the uptick lately, but this is after they gutted their own platform.
Sorry for my rant. I want Xbox to succeed (more competition is better), but Microsoft's version of success seems to be them being a third-party publisher where the Xbox brand means next to nothing, and that isn't competition. I wanted Microsoft to properly manage their studios, have organic first-party exclusives without having to buy major studios and publishers (this one also applies to Sony, although Microsoft clearly went nuts with ZeniMax and then Activision Blizzard), make gamers their primary focus, and continue to create innovative consoles. Maybe they'll surprise me with this change-up, but I don't see that happening.