With the XboneX that just released, it's hard to see them releasing first or else it will just be a little bit better than the X in side by side comparisons.

hard to say, because it's not only because of being the first to release, but having the right price and the have the most wanted exclusive

Headstart. If Sony comes out with cheaper system, they could simply drop the price. MS just needs to make sure they have killer lineup for the very first year. If they manage to get one massive next gen title (Cyberpunk, GTA6, TES6 etc) before PS5 release, we might have a winner here.

I see them both releasing Q4 of 2020.

Did Microsoft plan the one year head start or was it forced to do so?
Peter Moore did well building the Xbox library during that year which gave the 360 a head start when it comes to games during the first few years of the generation. Xbox 360 really had the best library during the first 3 years at least.

JRPG: Lost Odyssey, Blue Dragon, Tales of Vesperia, and many other exclusives
WRPG: Oblivion (Timed), Mass Effect and Fable
Shooters: Gears, Halo and Bioshock
Forza MS2, Kameo, Viva Pinata, Ace Combat, started Xbox Live Arcade with super good exclusive, many other Japanese and western exclusives.
Big franchises that were Playstation exclusives were announced for Xbox as well (most noticeable: GTA & FF).

Add to the games, the console was much cheaper and had the best network at the time.

The head start was a small reason really.

A headstart really means nothing. It's whether you have the better price for performance, attractive HW, and if you have the bigger brand. PS won all but 1 gen it has competed in. And even the gen it "lost" it was within 15M of the market leader. I see next gen being a repeat of this gen. MS may not want to have the weaker HW, but I doubt Sony is going to give them an easy fight on that front. Same goes for price. MS seems fine with pricing their consoles at $499. I think Sony is going to stick with $399, maybe $449. But, they are going to be able to get more bang for their buck when it comes to component prices. Unless Sony shoots themselves in the foot with a $599 price, I doubt there is much MS can do.

It wasn't planned. It was gifted to them by Sony, like much of last gen. Sony originally planned to launch the PS3 in 2005, but had to wait til 2006 because they hit a hurdle trying to get the Cell working as a GPU, too. 

If MS were to build a next gen 60fps console, and launch at the same time as PS5, but make sure the price was the same if not less, they should do alright. Casuals should have no problem buying a console like that. As for the XB1X, they could very well just scrap it altogether once the new model arrives late 2019 or 2020 and drop the "One" branding. This would justify the new console if it wasn't leaps and bounds better than the XB1X, to cater to XB1(S) owners. Having another XB ready for holiday 2021, could be the beast needed to get all of the XB1X owners to upgrade if the initial console wasn't strong enough for them to see the need. The casuals will buy for a cheaper price and the ability to play the newest third party games at their best. XB1X owners will demand strong first party, which should be in full swing by 2021.

They tried that with the Xbox One. They got ridiculed into oblivion, sales suffered.

The casuals don't buy at launch though or the first year, nor do they care about a 60 fps console. Launch year is to draw the hardcore in, and perhaps the promise of 60fps is enough to get them to upgrade again. The danger is that the hardcore might give the ps5 a try first and wait for the beast model of the new xbox, then get drawn into the ps eco system instead. That's basically giving Sony a year head start. MS needs something to show a generational leap and a 60fps more 4K version of the X1X won't do that.

The mid gen refreshes plus diminishing returns are undermining the justification for a new gen. 2020 might simply be too soon.

This would be the point though. The casuals would be gravy early on but offering a solid 60FPS with say a 10TF GPU at $299-$399 should be enough to get the hardcore to jump on it. This is also assuming the PS5 launches at a similar time frame if not shortly later, at say 14TF for $399. The type of people who buy an XB1X are mostly the ones who want the newest best thing as long as they can afford it. Offering them an upgrade for a much cheaper price than the XB1X was, with the promise of solid 60FPS should do it. Telling those same XB owners or fans that a 20TF version was coming for late 2021, at the same time they announce the shortly available 60FPS/10TF model, would give them the choice to stick with their XB1X for now, but at 30FPS/6TF, or upgrade for cheap and then have the option to pay $499 again late 2021 for an upgrade.

I couldn't imagine many hardcore XB gamers holding off, especially when they see the newest XB being $299-$399 and the 2021 model being $499. Many will want to jump in right away, and the more that console sells early on, the more word spreads, and the more casuals buy a new XB. This is also assuming that XB1(S) becomes obsolete and the weakest XB that can play future games that is available for sale, is the new 60FPS/10TF model. You drop the XB One brand and hardware entirely, but allow FC with the XB1X so you don't piss off any of those owners who aren't quite ready to upgrade. It also allows those owners to sell their XB1X to a casual, mind you for less than $299-$399 even though they paid $499 not all that long ago, so they can upgrade immediately.

This plan would allow XB to be first on the market, with the cheaper model that plays the newest games the best they can be played on an XB console, with the knowledge that a year or so after the stronger PS5 launches, an even stronger XB will be on the market to claim the strongest hardware. XB will be implying they have the most powerful hardware available, even though it won't be true until a year after the PS5 hits. Yet that image will be left on everyone's mind that if you buy a PS5, you won't be getting the cheapest model and you won't be getting the best performing model. It's like a mental hardware marketing trap.

XB 60FPS/10TF launch late 2019 for $299-$399 but stays $50 to $100 below PS5 at all times. PS5 60FPS/14TF launch sometime in 2020 for $399. XB 60FPS/20TF launch late 2021 for $499. Which are you going to buy after being told by mid 2019 that all 3 of these consoles will be available in the coming years? Would PS really bother to try and put out a PS5 upgrade by 2022 that vastly outperforms the 2021 XB? I really doubt it. A 2020 PS5 launch probably means 2023 at the earliest for another PS5 upgrade.