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The Xbox Series launch was a significant improvement but it was still kinda rough and notably worse than the PS5's launch which is awful when you're already way behind. The Xbox One's launch was horrendous but since it was the successor to the really popular 360 a large chunk of Xbox players switching platforms still meant there were a lot left to buy an Xbox that gen.
For this gen though they were coming of a bad generation so needed to either absolutely kill it out the gate or have Playstation majorly screw up to have a shot of regaining notable market share and neither of those things happened and with them having the worse launch yet again and the growth of PC meant another round of platform switching. They did make moves that helped in the first couple years like the Series S selling well for a while due to the other consoles having huge stock issues but it wasn't enough to overcome the big disadvantage.
The real killer though was 2022 having literally no notable first party games and 2023 having nothing major till September resulting in a nearly two year period without any major console exclusives while Playstation had a great 2022 which made 2023 not having anything major till October not a big deal. And Starfield had a good launch but quickly tapered of due to weak reception so it didn't live up to expectations at all which really isn't ideal when other releases that year like Redfall and Forza Motorsport flopped.
Basically they were in a bad position from launch day that was masked by the pandemic and an awful lineup for a couple years killed any remaining chance of them being competitive this gen. The multiplatform shift in the past year is them giving up on trying become competitive with hardware ever again which considering they own stuff like COD now is for the best long term since video game consoles won't be a thing forever. Them releasing everything on PC since mid 2016 alone would've made it tough for Xbox hardware to not decline this decade but releasing stuff on Playstation cements that traditional Xbox hardware is on the way out within the next decade or so.
It would've been interesting to see them try one last time with them trying to get as much advantage as they can from Bethesda and Activision Blizzard from launch but unless the PS6 was a mess it probably wouldn't have amounted to that much. Playstation will eventually start having a tough time as well since with full exclusivity having largely gone away other than Nintendo I think a notable chunk of Playstation users switching to PC instead of buying a PS6 is likely. Other than that they should be fine till at least the mid to late 2030's though.
