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Well hardware sales effect active user base, active user base effects both software sales and subscriptions, so... It is a pretty major factor...

Say for example that, PS5 and Switch both sell 100m+ consoles, and then the XB4 only sells say 12m consoles.

That would have a huge effect on total software sales and subscriptions going forward, and it would also effect how many games come to Microsoft's platform.

It also would effect how often the Xbox brand is spoken about (Smaller user base would mean less word of mouth).

Basically, a lot of things synergize off of console gaming hardware sales, even if the profit margin on hardware itself is basically nothing.

Sure, Microsoft can become a third party publisher and just run their own storefront, but how do they then keep their slice of the pie from shrinking against all the other alternative storefronts/services if their brand word of mouth gets diminished from its current position?

Sony's hardware/software/service ecosystem contends as a fairly strong competitor with the entirety of PC gaming because of hardware sales supporting the brand, etc. its influence is self synergizing and to forgo that focus is to become a smaller competitor, not larger.