I think a lot of Xbox Series X/S buyers wish they had a PS5 or buy a PS5 as well to play Sony first party titles. And come next generation, if Xbox doesn't have anything to compete with the quality of Sony's games, then I think they're dead. We're 2.5 years into the current generation and Microsoft has almost nothing to show for it except Forza and Halo, which was a delayed mess of a game. Add in to that the fact that most third party games perform better on PS5.
They've been on a downward trajectory after Xbox One, where they refuse to state how successful it is, with analysts predicting the PS4 outsold them 2-1. Xbox One was a terrible announcement and launch.
Xbox Series X/S are great pieces of hardware but they just can't compete with PlayStation in every other aspect. They've let down developers with the Series S since developers have to target 2 separate SKUs for Xbox, increasing developer effort. And in some cases developers are withholding their games from Xbox if they can't run on the weaker Series S, as you are not allowed to launch on Series X only (see Baldur's Gate 3). If Microsoft changes the rules around this it will benefit developers but it will let down consumers. PS5 is predicted to be outselling the Xbox even more so this generation. There's practically no reason for a consumer to buy an Xbox unless you're a fan of their exclusives, which they have done an excellent job of killing interest in.
I think next generation will be when Microsoft taps out and leaves the gaming hardware market, except for maybe their controllers. They will pivot to software only and focus on selling Game Pass for PC players and game streaming for the remaining consumers. Personally, I don't think that will have a good outcome.