I knew the moment Xbox decided to stopped doing official bundles with new releases, they shifted their strategy away from pushing console sales in any significant way. They decided to not release a Starfield bundle, Forza Motorsport bundle, Indiana Jones bundle, and the biggest culprit was not having a Black Ops 6 bundle. It is wild they didn't release a Black Ops 6 bundle because it could have easily pushed Xbox sales over a million for the month of November.

2025 is stacked for Xbox 1st party and 3rd party releases. They could easily make a big marketing push this year for Xbox consoles and games. If they increase supply, bundle some notable release, they could have a nice bump in console sales. Will they? Probably not.

I think one of my biggest gripes with Xbox this gen is the lack of direction, they keep saying they're doing x thing or not doing this only to backtrack a year later and as someone who was tempted to grab a Series S a few years ago due to them saying bethesda games would be exclusive etc i certainly don't want to anymore

Also to note that MS has tried multiple times to try getting back into the PC gaming market, and now they've managed to keep themselves within that sector, so now they have had to merge both sides into one single brand and keep the momentum going for both.

Sony & Nintendo don't have that issue, nor do they care (Sony still sees PC as a slice of pie they can "convert" to PSN, MS has always had Windows, so that was always going to be a thing, just not the same way it is for Sony). 

MS is now past that point where it used to focus on just a single console and no other platforms, and they cannot really afford to go back to a single platform, it'd kill them far faster as a brand to just abandon PC and go back to Xbox only (Also it'd leave their own slice of pie for Sony to gobble up with their PSN mantra, which also wouldn't make sense). 

I think people are greatly forgetting just what kind of era we are in now, and that some of you seem to think we're still in this 90's era, where it's all about the shiny plastic boxes, and not that digital ecosystem world and brand connections/network platforms. The plastic box wars are over and have been for 2 gens now. The current era is the ecosystem war, where it's all about extending to different sectors and pushing your brand wherever possible (This includes movies/TV, mobiles, PC, social media, other platforms, etc). 

One of MS biggest issues that cannot be denied is their lacking first party. The only one I was ever interested in from them in years were the AoE remasters and the sequel AoE 4 on the PC side. I've fallen out with Gears, Halo, never cared for Forza/MS flight sim, Crackdown isn't the same for me anymore and Fable is still nowhere to be seen after all these years.

With Sony in recent years I bought: HD2, HZD, and Days Gone. Though given Sony's recent push for PSN requirement, I am now just outright barred from ever buying their games on Steam again, so I guess they've chosen to not accept my existence/money, which makes that worse than what MS isn't doing right now. 

At the initial stage, it hurt a bit that Microsoft decided against making exclusives for the Xbox Series. It isn't the dealbreaker though, because the biggest chunk of the market doesn't want to mess with a PC.

What hurt more early on was that Microsoft couldn't deliver on their notable IPs like Halo and Forza, both launching to disappointment. The rate at which Microsoft released games wasn't good either, so they didn't have an answer for what makes the Xbox Series a better purchase than the very comparable PS5. But Microsoft lucked out and could benefit from the semiconductor shortages to buy themselves more time to get the software for the Xbox series right. Sony couldn't produce enough PS5s, so some intended purchases inevitably went to XS. But... Microsoft didn't get it right the second time either.

It's at that stage that Spencer's acquisition spree of major publishers began to haunt Xbox. The question became, "If Microsoft spent so much money on studios and IPs, yet at the same time sells so few consoles, how is this ever going to pay off?" So the whole operation went from backbreaking to neckbreaking when Microsoft started to really branch out to other consoles. This is why the closing question of the OP is simply the wrong question to ask. At this point in time Microsoft has no intent anymore to make Xbox hardware sales more competitive; they are basically already in a transition period from console manufacturer to third party publisher where their whole strategic setup will kill Xbox as a hardware platform eventually. But because the people at Microsoft lack the foresight of where they are going and where they want to go, they'll likely put out a fifth-generation Xbox despite further decline in sales being a foregone conclusion.

I think the biggest thing is they vastly overestimated how much GamePass would disrupt the traditional software market.

Its been somewhat overlooked, especially with Microsoft going third party, but I feel like Day One PC releases essentially shifted a decent amount of their player base towards Valve/Epic. PC Gamepass has been growing, but ultimately, the Xbox console is going to be the driving force behind increasing subscribers. I think they expected Game Pass value proposition alongside the Series S to siphon away users from Sony. 

The Xbox Series launch was a significant improvement but it was still kinda rough and notably worse than the PS5's launch which is awful when you're already way behind. The Xbox One's launch was horrendous but since it was the successor to the really popular 360 a large chunk of Xbox players switching platforms still meant there were a lot left to buy an Xbox that gen.

For this gen though they were coming of a bad generation so needed to either absolutely kill it out the gate or have Playstation majorly screw up to have a shot of regaining notable market share and neither of those things happened and with them having the worse launch yet again and the growth of PC meant another round of platform switching. They did make moves that helped in the first couple years like the Series S selling well for a while due to the other consoles having huge stock issues but it wasn't enough to overcome the big disadvantage.

The real killer though was 2022 having literally no notable first party games and 2023 having nothing major till September resulting in a nearly two year period without any major console exclusives while Playstation had a great 2022 which made 2023 not having anything major till October not a big deal. And Starfield had a good launch but quickly tapered of due to weak reception so it didn't live up to expectations at all which really isn't ideal when other releases that year like Redfall and Forza Motorsport flopped.

Basically they were in a bad position from launch day that was masked by the pandemic and an awful lineup for a couple years killed any remaining chance of them being competitive this gen. The multiplatform shift in the past year is them giving up on trying become competitive with hardware ever again which considering they own stuff like COD now is for the best long term since video game consoles won't be a thing forever. Them releasing everything on PC since mid 2016 alone would've made it tough for Xbox hardware to not decline this decade but releasing stuff on Playstation cements that traditional Xbox hardware is on the way out within the next decade or so.

It would've been interesting to see them try one last time with them trying to get as much advantage as they can from Bethesda and Activision Blizzard from launch but unless the PS6 was a mess it probably wouldn't have amounted to that much. Playstation will eventually start having a tough time as well since with full exclusivity having largely gone away other than Nintendo I think a notable chunk of Playstation users switching to PC instead of buying a PS6 is likely. Other than that they should be fine till at least the mid to late 2030's though.

Lack of direction and lack of identity.

You think you don't know what Xbox is up to? Microsoft doesn't even know what Xbox is up to lol

Quite a few of the issues are carried over from Xbox One, and some new ones have arrived.
-Day One releases on Xbox and PC.
-Not enough third-party true exclusives, timed exclusives or console exclusives people want to play.
-People dump on PS5 not feeling like a necessary upgrade from PS4, but let's not sugarcoat PS4's first two years or so as really fantastic. Most games people love on PS4 (whether exclusives or multiplats) released in 2016 or later. All of this to say PS5 has had some cross-gen and PS5-gen only games that people want to play. More so than on Xbox. People want to play games like Spider-Man, God of War, Demon's Souls, GT7, Ratchet & Clank, Horizon, and even now stuff like Astro Bot.
Halo Infinite has gotten a better reception than Halo 5, but let's not pretend it's considered some fantastic game. Plenty of people would take the Bungie Halo games, namely the campaigns. Infinite didn't even release until slightly over a year into the Xbox Series, when it was intended as a launch title. I do think Halo Infinite at its current quality (or better) released at launch or by May 2021 would've helped the first year of Xbox Series a lot.
-PS5 feels new. It has an obviously new controller with a premium feel and features, and it has a new OS. Xbox Series X/S have a very modest change in the controller (the smallest change to date from one Xbox console to the next) and use the same OS as Xbox One.
-Optics. PlayStation has a lot of issues but look much more competent than Xbox in both PR and sales.

-Announcing the successor is in development as early as 2024. We're in the days now where generations are about 7 years or more. It doesn't look good to announce development of a successor about 3.5 years into your current platform. Xbox 5 is tracking for November 2026, November 2027 at the latest. 

-Switch and the upcoming Switch 2. Now this is a pretty small reason, I barely even mentioned it. Wii U was an unappealing console that existed during the first 3+ years of Xbox One. I do not think it was taking any Xbox One sales. People who had an Xbox One and a Wii U probably prioritized their Xbox. Switch has been selling like gangbusters, especially around the time Series X/S launched. And with Switch 2 imminent, people would rather save their money for it than a Series X/S. Again, not a big factor but I have to think Nintendo's success has taken a few million units away from Xbox Series X/S.

Their only exclusives worth talking about this gen are Forza Horizon 5 and Indy, and Indy will be on Playstation very soon. Everything else is either niche or didn’t live up to expectations. And the XB1 after the first two years was a similar story.

It seems that a lot of people got the exclusivity thing wrong, including myself. So kudos to those who said at the time that MS buying everything up was their way into third party... because that's clearly what it was. If they had bought all those IPs up, COD etc, and made them exclusive and doubled down on their console platform, Xbox might have had a chance to rebound. But they aren't in that business anymore. They're transitioning out of it, and doing so on the sly, which is sad. Yes, I would say they were my third-favorite, but I still enjoyed their unique platform. Watching them slowly die out, and, by proxy, the console industry shrink is not a good thing, imo.