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I disagree, they could've came up with a traditional console on par with Neo-Scorpio, a true 9th gen system not held back by a weaker version. The best version of multiplat games with exclusive features not possible on PS4/XB1 and even exclusive games.
Combine that with a better online service, a subscription scheme (a la PS+ for example) and of course, their own software and that would have a chance of taking away gamers from Sony and MS, but they're just too conservative to sell hardware at a loss.