Like many, I have been with Xbox since its inception. However, I cannot deny that Microsoft has missed the mark with Xbox on several occasions. The solution to "send Microsoft a message" is to stop buying GamePass Ultimate. I think what happened with mass cancellations was a healthy for the industry and will hopefully only spur competition; however, if you can't afford 30 USD monthly, then it's time to get realistic with yourself and make other sacrifices. 

Question yourself:

Do you really need every game immediately? Most likely if you're on this site, you have a backlog. Ball on a budget and buy everything on sale. You cannot say that GP wasn't expected to go up in price regardless of the % increase (this is not a defense of price hikes).

What I practice:

• Can I afford the most powerful version of XB and GP Ultimate monthly? (yes, but I refuse to buy something that I feel little benefit with lackluster catalogs vs. the Xbox & Xbox 360 years)
• Buying the Series S at launch - my thoughts were to spend more money on actual games; the hardware itself has performed wonderfully for me
• Buy individual games on sale - EX: I just bought Star Wars Jedi Survivor for 12 USD a few weeks ago
• Stop buying launch: reap the benefit of games being fully patched (or somewhat better than launch) when you buy later
• Subscribe to GP Essential for online play only - consider redeeimg GP from reputable third party sites to get the cost even lower (to my knowledge, you're not forced to only buy from Microsoft directly)
• Play the occasional good game on the lower-tier of GP
• Price hiked consoles I will avoid, and my Series S will be used until it no longer functions

Will Essential GP increase in price? Most likely, but I'll hold out until then. Continue enjoying XB because it really is a FUN place to be despite its setbacks. You don't need everything immediately!

In the short-term, possibly the long, Microsoft will not go back on the price increase. They won't keep it at $20 or meet in the middle at $25. The best they could do is add more benefits.
If people don't want to "rent" games, Essential is indeed the best choice and you buy the games you want when they go on a good sale. It's like you already mentioned. I recently unsubscribed from what was called Core because I'm not playing Xbox enough (it has not ever been more than a tertiary platform for me in the long run) and need to use the money on PS Plus Essential, Nintendo Expansion Pack (just got a Switch 2 over a month ago) and plenty of non-game related things. When I make more money in the future or find enough use out of Game Pass, I will subscribe to at least the lowest tier again.
Microsoft is testing how much people will pay. Ultimate might get up to $40 a month by late 2026-early 2027.

Don't think for a second they were ever "asleep". This was likely but one step of many toward a larger goal. I believe that goal is simply to leave the console industry, but we'll just have to see. But I promise you, what you're seeing now was planned years ago. That's how businesses like theirs do things.