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The problem I see with this analysis is that while the OP correctly points out that we often view these things from a Western perspective and that clouds our judgment, it makes a similar mistake of viewing things through a lens of hardware ownership.

You know what takes up less space than a Series S? The cell phone or laptop that you already own. You know what cost less than a series S? Buying nothing but a controller. And it appears to me that that's what Microsoft is banking on taking hold in the developing world. They are working on cloud gaming. They've done it in a much more intelligent way than Google, in that they have started it as a secondary option for people that are already in the Xbox ecosystem. But, it is very clear that streaming is coming on, and Microsoft is at the forefront of that.  I imagine over the next five years there will be a lot of people subscribed to Gamepass that do not own an Xbox or a gaming rig.

So, while I won't say there's zero chance that the Series S ends up as the best selling console, I will say that I don't think Microsoft is trying to make that happen. They're trying to make XCloud the most popular way to play games, thereby eliminating the need for dedicated gaming hardware (beyond a controller).

Further, since Nintendo and Sony both still seem to be focused on selling hardware, it seems unlikely that Microsoft would beat them in that game. They're not even playing that game.