The way things have been going lately it wouldn't surprise me if the true goal is to turn operating systems into an online only subscription.
Could be easier for grandma, could reduce e-waste, will definitely be used to pigeon-hole us into an endless hell of subscription software.
Because you need a basic PC to connect to it which is enough for most usecases anyway. But not for gaming so there it makes more sense.
I'd say those are some stats worthy of appreciation.
It's also bold to assume that everybody plays twitchy FPS. CSGO runs on Linux, the Steam Deck uses Linux in the OOBE, I'm sure that if push comes to shove and MS stops offering native Windows, people who want to play CSGO will just use Linux in the same way that people use emulators and FPGAs and CRT PVMs (hello) to play what they want and have the best experience.
However, what's probably more likely is that latency-dependent games becomes less and less popular if cloud gaming takes over, because more people are probably going to be playing a game that's included in their cheap monthly subscription rather than spending $XY. Making a twitchy niche latency-dependent game makes less sense than reaching as many people as possible where they're playing.
I can't imagine a world where Microsoft kills native Windows though, it just doesn't make sense. How environmentally friendly it is or is not is also a consideration with streaming a desktop.
Never said "everybody" but enough do. https://steamcharts.com/app/730 Current active players 1,458,036 for CSGO alone
Look at how many competitive FPS have tried to take on CSGO and have failed since its launch. CSGO is very much the gold-standard of its genre.
Despite modern PC gaming largely being a better experience (minus bad ports, buggy launches), consoles still sell in huge numbers. If cloud gaming grows, I expect it to replace consoles for a lot of people.
Even now, rather than download a game to my living room Xbox, I'll just stream the game via the cloud to it. However, if I'm sat up close with a game at my desk, of course I'll install it on my PC. But at x feet away from my TV in the living room, whatever is lacking visually or in terms of latency, I'm not gonna care about when my input device isn't exactly all that performant. I dare say that about sums it up for a lot of people using the cloud to game.
This is without even bringing up the number of Nintendo Switch games that are streaming-only as the console can't handle it natively. Doesn't seem to bother Switch owners much.
Hybrid? Maybe. But even so, I think it'll still make more sense to just own the hardware and not rely on WANs with variable latency.
For the average schmoe or office worker? Probably makes sense to have it on the cloud, especially as how well Xbox cloud gaming works for most people.