Again its not suppose to be the leading though i am sure they would love it to be. The whole point of Win10 Store is to promote Windows 10. You cannot play majority of Xbox games without owning Windows 10, thats there killer app against Apple and Linux users. Yes even Steam has a bunch of Windows only games that cannot be played on rival OS. Thats MS aim.

Forgive me, i am writing this on my Mobile phone, ill clean it all up when im home from work.

Xbox is making money no doubt, but are the money is a return investment or just to cover some debt?  

Xbox is important, but which Xbox , Xbox as a service or Xbox as hardware ? 

The Eco system of pass Xbox consoles like Xbox  and Xbox 360 is big no doubt, but Xbox One not so much, and if they want they can keep continue on Windows store. 

Well. I do not agree with that. Windows 10 isn't the only Microsoft Operating System.

Windows 7 is still the Operating System that the majority of PC gamers use at almost 60% marketshare.
https://store.steampowered.com/hwsurvey/?

Heck, my Core 2 Quad rig is still humming along with Windows 7 and it handles a ton of new releases fine, just not Windows Store games... And they aren't important titles in my eyes.

The revenue is what makes the big difference. Live is massive on the X1 and if MS are struggling with Xbox they wont be investing more into the brand. They clearly see the potential in the hardware however lets not forget that Xbox to MS isn't as important to the buisness as PS is to Sony. Sony strives to make PS successful where as MS doesn't need Xbox to be successful to survive. But as a major corp MS will compete because why not if there making money.

Windows 7 is a great OS no doubt however its not the best place if they want to play Xbox Exclusives. All X1 exclusives are only accessable to Win10 not 7 unless theres a hack which i wouldnt be suprised or on Steam which majority of there big hitters are not.

It's not as many exclusives as you think though, it doesn't help that Microsoft doesn't make many games anyway.
The only notable games worth mentioning is Forza, Gears of War 4,  Sea of Thieves and Halo Wars 2. That's it.
And in regards to Gears of War 4 and Halo Wars 2... The multiplayer for those games are dead anyway, they would probably be still active if they were actually on Steam.

Halo Wars Definitive Edition, Killer Instinct, Quantum Break, Cuphead and so much more are all on Steam and thus Windows 7.

Besides, thanks to the power of virtualization, you can run all Windows 10/Windows Store's crap on Windows 7 anyway.

But for comparative sake... Do you know how many thousands of games are exclusive to Steam? ;)

You wont be happy for much longer if Age of Empires 4, Crackdown 3, State of Decay 2, Ori 2 and the rumored Fable 4 are locked behind the Windows 10 store. There is a chance for them to come to Steam however theres no garentee. Besides you can play all Steam games on Win10 plus all Xbox major exclusives so theres nothing but a gain from 7 to 10. Anyway my point is MS is using X1 as there killer app for there oppositions. Steam isnt exactly there opposition since majority of Steam users are on a Windows based platform, and better well should be because majority of Steam games only run on Windows.

Steam is massive and last time i checked my account has over 1000 brought games. Yes i am a 14 year old user of Steam. One thing i enjoy Win10 games over Steam is the play anywhere feature which puts up a good argument against Steam.

I don't see that in the cards, I just don't have faith in MS to bring back Halo Online. Which is a shame given it apparently has an audience with support from MS.

However, I'm thinking there is a possibility we'll see MCC on PC. That would be a good way to attract users to the Windows Store.

That's fine. - I have an Xbox One X you know, I might actually have a reason to use it one day.

Well. There are more nefarious (And I don't condone) ways of acquiring said games.

Windows Store is essentially Games for Windows Live 2.0. - I am really not interested, Microsoft would need to pay me to use it.

And don't get me wrong, I run Windows 10 on my primary rig, but I run Windows 7 on my older rigs, there is a ton of caveats running Windows 10, like forced updates... And not everyone wants that, especially if it's mission critical.

Steam is most certainly in competition with Microsoft. A game sold on Steam is coin that Microsoft misses out on, why do you think Games for Windows Live! and then Windows Store came about in the first place? Because Microsoft needed to compete with things like Steam, Google Play Store and so on.

I couldn't care less about play anywhere. - If I am buying it on Console it will be Physical, not digital for potential resale later.

Plus at-least on PC if servers are shut down (Nothing lasts forever), I will be able to take alternate avenues to acquiring said games... Would have been nice if I could redownload Ricochete on my Original Xbox for instance, but that's kinda' impossible now.

Halo Online is surprisingly active and fun. Microsoft should work with the developers who made the mod to get keep it online and bring them onboard as an official development team.
It's bringing gamers focus back to one of the largest franchises in gaming history... And that's a good thing... Especially with how average Halo 5 and the Master Chief Collection was.

Of course they are competing, however Steam isn't a horrible factor for MS. MS also make money off Steam and Steam also promotes Windows devices. MS are a major corporation that want a piece of the Pie that Steam is profiting on that's just about it. However MS aren't against Steam as much as others want to believe, Apple and other OS's like Linux are the threats to MS. If MS saw Steam as a threat to there business model they wouldn't be releasing some of there games on it. I mean what do we take them for? honestly do people believe MS are that stupid to be giving away there software to there opposition because of gamers who hate there products? They do it to cherry pick sales for games that basically have died or need to generate more money and it also supports one of Windows biggest advantages over there main competition. You don't see MS games on Apple or PlayStation aside from Minecraft. 

The reason Valve created the Steam Machine was due to panic of MS invading the PC digital side of games. Steam's counter against that was to compete with MS's Xbox however unfortunately for Valve it didn't turn out that well.

Valve also don't like to use DX and they tend to be pushing OpenGL which is why Windows 10 Store exists, so it creates competition for MS's own API. For some reason MS want to heavily support DX, I don't know why but they hold that API close to there heart. Win10 is to support DX for PC and Xbox is to support DX for consoles.

In saying all that, I see Xbox reducing there support for Steam but not entirely. They will compete with Steam but they wont destroy Steam. If anything I see low selling MS titles still arriving on Steam while there big hitters remain a selling point for Win10 and Xbox.

Only the future will tell.

Well for one, they aren't doing an impressive job of competing against Steam, in the same way of taking what makes Steam, Steam and making it in their own image.

They also have no chance of "destroying" steam. Not in a million lifetimes can they hope to do so. Though that doesn't stop MS from employing it's typical EEE strategy here and there (which is designed to destroy and absorb it's competition).