I think Xbox doesn't sell well. Thats why MS kinda stopped revealing sales data since X1 days. Now this was released by accident, and they combine with Xbox One. Imagine if Sony combines PS5 numbers with PS4, they'll be at 150 million? It makes Xbox look even worse. Remember with 360 they posted sales every day of the week lol.
I think Series is a great console mind you, its much better than X1 and there is little wrong with it in general. But Gamepass is kind of overrated, I had it running for 2 years and while it was certainly unique 2 years ago, PS Plus Extra doesn't really offer less. Ofcourse this is what competition does, but you don't have to get an Xbox if you want such a rental service. And the games on it, well the quality is all over the place. You won't find the best games on it, like RE4, Elden Ring, Dead Space Remake etc. MS exclusives are day one, good on paper, but in practice they barely release a thing and if they do, like Redfall, its trash. Halo was disappointing too. FH5 was the only new retail game on the service in 2 years I really liked.
The lack of exclusives also must've hurt them. There was nothing in the first year, and then Halo comes out and it turns out to be another dud that lost relevance quickly after launch. I think there is little incentive to buy an Xbox since you can also use GP on PC and again, Sony has a very good offer too. But in general I can do without both services. Right now I play FFXVI and SF6, both games you need to purchase.
I have the S and I like it, but I think this strategy doesn't really help MS either. I know they are kind of moving away from consoles, its their current narrative, and I think they are better off as a service anyway. They will lose like 10 million Starfield sales, as per predictions. If Sony wouldn't sign CoD, they'd lose even more. Strip away console costs and R&D, release all that shit on PS5 as well and let the money come in.