Respectable? I actually find it embarrassing after almost 8 years. Nintendo just crossed the 80 millionth unit sold in less than half of that time period and Sony is close to 120 million within the same timeline. No wonder Microsoft is… wait for it, embarrassed to show sales figures, because it is, well… embarrassing.

I know what you're saying.  Certainly the XB1 did not sell well as a standalone console released in the past decade, especially given its length of time on the market.  If this had been the 90's, 50 million would have been regarded as really solid sales for an 8 year console but the number of gamers out there buying consoles has massively expanded since then.  In this decade, successful consoles really need to hit 70-80 million to be given the same regard as consoles that sold 40 million back in the 90s.

That being said, we need to understand that MS is not a typical game company like Sony or Nintendo.  XBox is really only one facet of Microsoft's gaming domain.  If a person buys a PC for gaming, then this is basically guaranteed to be an MS system and probably (over its lifetime) will be almost as much of a profit maker for MS than an XBox sale would be.  As a result, MS is more than willing to cannabalize their own sales of XBox to facilitate PC users since the company wins in both ballparks.  MS makes decisions again and again that demonstrate that winning the console war is not their objective with the XBox.  I think a company like Nintendo would be a lot more panicked if the Switch took 8 years to hit 50 million and would regard this as a failure, but my feeling is that MS seems quite happy with the current situation for XBox and are not taking any drastic actions to get XBox out of third place. 

Maybe I am wrong about my assessment of MS, but this is just my feeling given my very limited knowledge of XBox and Microsoft's priorities in the gaming market.  I just know that MS wouldn't release their best exclusives on PC a couple of years after they release on XBox if they were driven to get people to buy XBox consoles.  I enjoy Halo but if I wanted to play the game, I would never buy a XBox since I know that it would eventually come to PC in a couple of years anyways.  Imagine if Nintendo did that with BotW.

What are you talking about, Swith fell off a cliff in 2018 because they already released all their big games in its first year.

Then it fell off another one in 2019 because Pokemon and Smash were all they had left.

Then again in 2020 because they definitely had no system sellers left after Sword and Shield.

Then again this year cos PS5 and Xbox Series are out now, and 2020 was definitely the peak and there's no Nintendo system has peaked after its 4th year therefore its impossible.

Don't forget that "Switch will never get any significant third party games".  That is why it sold 500k+ this week.

I know what you're saying.  Certainly the XB1 did not sell well as a standalone console released in the past decade, especially given its length of time on the market.  If this had been the 90's, 50 million would have been regarded as really solid sales for an 8 year console but the number of gamers out there buying consoles has massively expanded since then.  In this decade, successful consoles really need to hit 70-80 million to be given the same regard as consoles that sold 40 million back in the 90s.

That is true.

XBox is really only one facet of Microsoft's gaming domain.  If a person buys a PC for gaming, then this is basically guaranteed to be an MS system

That is a lie and one misconception I'm tired of hearing. If I buy a PC, just because it runs Windows it does not mean the operating system is a gaming platform. The idea behind a console is a closed system platform, a format, therefore, you control your ecosystem buy alluring them to make software transactions in your store –like Apple with iOS– or with physical software that can only be played in your closed hardware. PCs are NOT closed hardware systems, on the contrary, they are open platforms where other ecosystems can work and endure. So buying a PC and purchasing games on STEAM and/or EPIC, Microsoft has no business whatsoever in those business ecosystems. You would need to purchase games on Microsoft's store and/or maybe subscribe to game pass to have a hold on that user. So stop with the misconception that all PC gamers are Microsoft's "domain". The idea behind a console is to put a stranglehold on that customer by keeping him within your business ecosystem with a minimum statistical spending of software and services, a continuous revenue stream, not the one-time purchase of a hardware platform that only guarantees a small profit if you are not selling it at a loss in the first place. Actually, selling the unit as a loss is a testament that the hardware is only a vehicle to capture market share and not the sale of the unit itself.

As a result, MS is more than willing to cannabalize their own sales of XBox to facilitate PC users

Dumb. How does this make sense:

Microsoft: "Hey, let me encourage my potential customers to buy a PC instead –cannibalizing sales of my own hardware–and risk the huge possibility that they will take their business to STEAM where I will never see a cent of every game they purchase from every publisher except me?"

Unless the encouragement is to allure them [PC users] to your own store and subscription service –like Game Pass– there is no cannibalizing of your console sales, only losing market share, software commissions and consistent service revenue.

and again that demonstrate that winning the console war is not their objective with the XBox. 

And that's why they are taking the big "L". Business 101 is and always has been be #1, eat as much market share as you can legally can without drawing suspicious of monopoly and rake all the cash you can set your eyes on.

I think a company like Nintendo would be a lot more panicked if the Switch took 8 years to hit 50 million and would regard this as a failure

Of course they panicked! It happened with the Wii U, they pulled the plug after 3 years because their sales projections of that console was aiming no higher than 50 million in 8-10 years. The difference is that Nintendo did not sugar coat their failure with pride, marketing deception or half-assed games, they cut their losses, assumed public shame by slashing executive salaries and went back to the drawing board with humility, experience and lessons learned.

my feeling is that MS seems quite happy with the current situation for XBox and are not taking any drastic actions to get XBox out of third place. 

If that gut feeling of yours holds any truth, then it only means conformity and mediocrity. Being happy in third place is not what most bronze medalists feel at the podium. When you compete at any level, category or league, winning is the ultimate main goal. History remembers the super bowl and world series champs, the holder of the belt, not the K.O.ed down for the count. Third place in a race of three is a failure no matter how you slice it.

Maybe I am wrong about my assessment of MS, but this is just my feeling given my very limited knowledge of XBox and Microsoft's priorities in the gaming market.

Feelings do not make up facts.

I just know that MS wouldn't release their best exclusives on PC a couple of years after they release on XBox if they were driven to get people to buy XBox consoles.  I enjoy Halo but if I wanted to play the game, I would never buy a XBox since I know that it would eventually come to PC in a couple of years anyways.  Imagine if Nintendo did that with BotW.

You just hit the nail in the head, superb analysis. Explains perfectly why Nintendo is winning and Microsoft is losing.