I said they could do it, if you don't understand the difference between could and should you might want to look it up. Beside, if they give out a free console it would come with a contract obviously Microsoft already explored a subsidized business model with the 360. Subscription base model like Xbox gamepass and Xbox live is the future of Microsoft. If they can bundle Console, Gamepass and Xbox live and lock in people in long term contract, lowering the barrier of entry into the eco system they will certainly look at that business model.
The biggest competitor to PS5 is going to be PS4 Pro .... people are slow to make the jump and price really matters. A cheap Xbox one X holiday can sell more units then a new PS5 +$499.
You do understand that Microsoft doesn't need to be better then Sony?? They can have major financial success being 2nd or 3rd if you count Nintendo. Beside Microsoft focus is mainly on America they almost have 50% of the market if you only look at Sony and Microsoft... WW Sony has a 4 to 1 advantage over Microsoft, but Microsoft has room to grow. Microsoft focus should be to win back North America with next gen consoles.
Microsoft for next gen need more exclusives, it will take time and it all depends on when Sony will release the PS5. Microsoft next consoles need to release with great launch titles and a staple of games on the way that will decide how much of early advantage Sony will have over Microsoft. Microsoft can have a slight power advantage over Sony when Sony release the PS5 information for similar cost.
Here some stats to back up my claims:
In the cash rankings, Microsoft is second among those four companies, with $126 billion in cash and equivalents. Alphabet, the Google parent, has $92 billion in cash, and Amazon comes in at $22 billion among the four.May 2, 2017
The PS3 was cheaper than the PS4 when the latter launched, but that didn't stop the PS4 from selling spectacularly. In addition, the PS4 has been outselling the XB1 even when the latter has been cheaper. Your conclusion that the Xbox One X can sell more than the PS5 on the basis that the former is cheaper has multiple holes, as a result.
As I already stated in my response to you (in which you've apparently decided to glance over), a hypothetical situation where the PS5 gets a year headstart would allow Sony to grab a good chunk of the Xbox fanbase. Microsoft can release a more powerful console a year later, but if the consumers are satisfied enough with what the PS5 offers, that would end up hurting the potential revenue Microsoft can earn from hardware, software, and services. Also, your statements about power miss the point of why it was emphasized at the beginning of this gen. The reason why people made a big deal about the PS4 being more powerful than the XB1 was because the former was initially more powerful and less expensive.
And what if the PS5 starts stronger than the PS4? The PS4's launch library was not particularly great. Knack's MC was in the 50s and Killzone Shadowfall's MC was in the 70s. Considering that Sony's 1st party studios have found their groove, it's not out of the question that the PS5 may launch with a significantly better library. And then, we also have to take into account the possible backwards compatibility with PS4 games. That would provide an instant library for PS5 owners to start with and perhaps, even provide substantial enhancements like the PS4 Pro. It would also help publishers sell more copies of their games and not have to worry about them getting left behind like what we saw with Puppeteer. After two holiday seasons, the PS4 sold 18.5 million units. That would be quite a headstart for Sony if the PS5 gets a year headstart (which I strongly doubt will happen, btw. I think the PS5 and XB2 will release simultaneously).