No.

But it doesn't hurt either.

That doesn't justify losing billions building Consoles.

Yes we do.

More competition is good.

I also think gaming helps MS's image. It has a sexier image than their core business and makes them a cooler more attractive company. It also gives them a reason ot hold onto entertainment IPs.

There’s absolutely no guarantee that Sony and Nintendo would allow Game Pass on their consoles just because Microsoft stops producing consoles. In fact I’d say it’s still unlikely. And Microsoft would then be at their mercy which is far from an ideal situation.

I do think you are right about Microsoft being done with losing money subsidizing console hardware. But that just means the hardware will be more expensive, not that they will stop producing consoles. There’s no reason to. They have already ”raised” the price by making the Series X almost exclusively available in Forza bundles. They don’t need to outsell Sony to still have a meaningful console presence.

We need it to put Sony in check

Otherwise, Xbox is kinda of a useless machine unless you really love Microsoft shooters

Sure it would be "great".

Say hello to $700 PS6 and $90 games. What's to stop Sony from charging what ever they want or doing what ever they want in that scenario?

If Nintendo was making a traditional "big box" home console the answer would be different, but since they don't, Sony would basically be left alone with that market to itself and what's really the motivation for them to price things fairly? 

PC GPUs cost $700-$1000 all by themselves, so that's not going to be a threat to them. 

100% correct. There's no way either Sony or Nintendo would allow a service on their platforms that would drastically undercut their software ecosystems. 

Xbox finally has the studios it needed all along.
Why should they stop now? when their so close to being able to turn things around? It feels a little too early to give up, after the efforts they put in.

final fantasy exists because xbox exists

Competition is a key driver of innovation and can help keep prices in check. It also provides consumers with a range of choices. I doubt the PS5 would have achieved its current level of quality if Xbox had completely dropped out of the hardware business during the previous generation.