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I really don't know what Microsoft's strategy is anymore. It seems like they are all over the place. On the one hand they are investing heavily in xcloud and gamepass. But they also seem to want to have the most powerful console when Scarlett releases. They seem kind of scattered.

If they are waiting to release a more powerful system than the PS5, then it wouldn't surprise me. Not only in Microsoft obsessively image/marketing focused, but they think of gaming in PC terms. Games made for the PC are designed to be upgrade/downgraded based on hardware specs. It is easy to make these modifications. Games made specifically for console don't necessarily upgrade/downgrade so easily. But they are likely thinking of games in PC terms.