I think they'll prioritise working on the next stage of Xbox over trying to rejuvenate the Xbone. So in that sense I suppose one could say they've given up, in the same way Nintendo "gave up" on Wii U by not cutting price and really putting an effort in for increasing HW sales. On the other hand they are releasing a new Xbone model so I don't know.

As for the next generation I don't see them increasing their investments in consoles. Their focus will be on Xbox as a service more than a brand of consoles.

I voted they gave up. I think MS is slowly leaving the console market and will not return in a while.

The central parts of MS have been wanting to dump the Xbox division for some time now, the excuses to do so are racking up. I think there's a reason they're trying to offer an olive branch to the PC gamers who were abandoned by them many years ago, the signs are pretty clear from where I'm sitting.
I for one would welcome MS home to PC gaming again, they did amazing things on that platform, but Xbox never gave me anything I'll really ever miss and I never bothered to buy an Xbox and never really wanted one. That's just my personal opinion though, I know the brand has a very large fanbase, but there's a limit to how much money MS are willing to lose and basically not gain anything neither in influence or appreciation for it.

I agree with this.  MS cannot change the narative with this current gen.  What they can do is build to the future.  The price of the OneX says it all.  MS is not looking to bleed money in a effort to gain some small market share against Sony right now because right now their lead is just to large.  It would take Sony to make some really bone headed moves and even then their lead is just to wide.  The tone I got from the conference is that we are making a diverse console that plays old and new games.  They are playing to their base and keeping themselves in the green.

MS has never been run by investors so who cares what they want.  What matter is what the top brass that run the company wants and so far they see a place for the Xbox brand and eco system.  What you will see is that MS will continue to merge their effort on the PC and console side making both experience seamless.

They just shifted strategy. I doubt they'll leave. Not when the PC gaming side of things is just getting started.

So the PS5 could potentially be another attempt at dominating the living room, like the PS3 with Blu-Ray, and the XB1 with "sports, tv, sports"? That does not bode well for the future of games.

 If both MS and Sony have the same grand ambitions of doing more with their games division, than just games, then the next logical step would be to move towards "games/tv/movies as a service". So MS would try to get more people paying for XBox Live, and Sony would push the hell out of PS Now. Eventually you wouldn't be able to buy a game anymore, physically or digitally. Instead you would be paying a monthly fee to have access to said games in the same way that you pay a monthly fee to have access to other media. Except games are more costly to make, so the monthly fee would be much higher. Maybe $15 a month for the games, and $10 a month to play online. That way they'd be able to milk a good $300 a year from a consumer that only buys three games at $60 a year. 

Why is every corperation's main strategy for profit to just screw the consumer over? 

I thought their presentation was fine. Really, the only thing I had an issue with is how terrible the Scorpio's name is.

$500 was a good price point for a true 4k console too; I'll be preordering it as soon as it's available.

Yes, they gave up. Sure, they have the money to do whatever they want, and they did exactly what they wanted: They gave up. Keeping up with the console market is not as profitable to them as their other departments, so they are simply catering to their niche audience.

They've given up so badly they are releasing another console.