Part of the problem is IMHO that what you have said, even if it may seems logical, don't really work for 2 reasons.
One, is that, maybe because of higher social security, we don't care as much about value, at least in gaming. I don't want cheaper games, I want better experiences. I understand that a Series S would allow me to have a lot of fun for cheap, but a PS5 will allow me to play all of the exclusives that I love from Sony in decades. AND all third parties games, unless Microsoft have made deals against it. AND whatever bonus Sony did that for some reason Xbox did not, like the Dualsense this generation. Of course, if enough games are there, and a lot of mega hits in the future are happening more in Xbox than on Playstation, I will look. But that would mean 1 or 2 generations at least. Why would I look at a Series X when my PS5 is giving me so many great games? The brand is strong because of decades of success. I know that having a Sony console means having great single player games that I like. Unless that change, I have no reason to look elsewere.
This is the second reason: Being last is not a good place. You know what you get with Playstation. You know that too with Nintendo. But with Xbox? Why try something else when what you have work well? This is not a dig against Xbox. The 360 worked well in Europe, because they got games and advantages like the better online. If they can do that again, they will gain marketshare. But the time lost will be hard to recover. One advantage that Nintendo has on Sony and Xbox is their IPs. Outside of printing money machines like Pokemon and Mario, they have a lot of known IP that they can use that have an audience. Sony is not at that level, but stuff like Uncharted and GOW will always find gamers, as long at the game is good of course. By not having done that work, they will need to work even harder to get on track. Look at let's say Scalebound, and compare it to a game lie Ghost of Tsuchima. If Scalebound managed to work and sell well, a sequel would probably be out around now. Because Ghost of Tsuchima had that success, we will probably have a sequel. That is 2 to zero. 1 game that I loved, and one that I am certain, unless a disaster happen , that I will love in the future. Because Spiderman was good, Spiderman 2 was expected. As I am not playing Xbox games this generation, I can't be expecting anything from them in the next one too. So even if a good game like Hi fi rush happen, I don't care that much, because I am playing GOW Ragnarok, then Resident Evil 4...
Just in case, of course Xbox have some good arguments for it. But the PS5 too. Even if they were equals, familiarity with the Playstation ecosystem would make me prefer it. For next gen, I will naturally look at what will Xbox offer. But I know that unless Sony make a big mistake, they will have my money first, and ony if Xbox had a really good offer will I think about buying a Xbox. So Xbox would need 2 generations to win me over. Not because they suck or something like that. But because they failed for 2 generations to be what I want: the best place to play. The PS4 was the best place to play games. For me, the PS5 is doing a lot of the same. Sorry for the long answer, but the subject is fascinating. How we see gaming completely differently because(I think) you got a 360 and I a PS3.