They are throwing in the towel because in the video they reiterate that Xbox consoles aren't central to their strategy going forward. Which in turn means that their Xbox-branded boxes will continue the trend of declining sales. I say Xbox-branded because the ROG Ally gives a good idea of the future of Xbox hardware. Likewise, so do their recent price adjustments for Xbox Series S and X, plus the prices of their Xbox-branded handheld PCs. Sega made an abrupt exit from the hardware business, but Microsoft has been set up to go the soft route of gradual decline until eventually nobody will mind that they are out.
As for their grander strategy of getting their gaming services on as many devices as possible, it's not going to work well. All their acquisitions have cost so much money that they'll continue to see it as a necessity to publish games on PS, Nintendo and Steam, so gamers won't see a reason to invest in a Microsoft-owned ecosystem. In order to win over people, you've got to have the desirable games that only you offer. Microsoft has lacked them for a long time now and they do not plan to have them either.
Legend11 correctly predicted that GTA IV will outsell Super Smash Bros. Brawl. I was wrong.
