What Microsoft should do to stay competitive.

[Bofferbrauer2]

Fair warning: My take will probably be a bit controversial.

I think Microsoft should concentrate on PC. This doesn't mean they should drop Xbox as a hardware brand though - but they could do something like they did with their Surface line of tablets and laptops: Create a line of PCs that are specifically designed for couch gaming in a new form factor and possibly with a simplified (and cheaper) version of Windows. They could also bring this even further if they want a make a competitor to the Steam Deck if they also want to make a handheld device. With semi-custom hardware from AMD they could even bring those at prices that wouldn't be possible for normal gaming PCs (as in, more console-style prices), thus growing their brand and market if they would go that route.

That way, they could both support their core business (as in, selling Windows and associated software) and their gaming business all in one go.

And as optional peripheries, I'd offer an external drive that could also read the discs from all previous Xbox consoles and play those titles on that Xbox console, as well as the old Games for Windows Live titles that don't work correctly anymore now.