I think Valve is just going to kill Xbox in a couple of years. Basically Microsoft is planning to make the next Xbox an "ordinary" Windows computer with a different UI as well as vendor-locked hard- & software. So essentially you'll get a (maybe) slightly discounted small form-factor PC for the living room that only runs games from the Xbox store, which will be more expensive than the same games on Steam.

Now, everyone laughs about the "ridiculous" pricing of the Steam machine but once hardware prices come down they will make a second generation that will be an unlocked PC in the same form factor and probably just as powerful as the next-generation Xbox. They might even pass on some of their supply side bargaining power to the end user. Then you will have the choice between a fully locked down Windows PC that only plays Xbox games for 1,000 USD or a fully unlocked Steam machine that plays everything from the Steam, Epic, GOG store, can install regular games and even lets you do work on it, for probably around the same price. Built by a company that has the highest gamer trust of any company we know. Guess this will be a no-brainer for most folks! They have everything to pull this off as well, the brand, the trust, the gamers, the store, the platform, the money, the market power as well as experience with hardware. My take is that they wanted to pull this move already but the AI craze made that impossible so they are using the first-gen Steam machine to learn about the market, but I predict that once prices come down we'll see an announcement, they can time it to match the new console generation by Microsoft and Sony as well. The market should be in a great state by then as well, lots of folks were essentially priced out of the GPU market and NVIDIA won't even release a new generation of gaming cards anytime soon, so all those people that have the buying power but don't know where to put it would flock to a new Steam machine if it can deliver good performance for a reasonable price. And the thing is Valve will have the power to make sure studios optimize games for the Steam machine as well.

Really don't know what Microsoft is doing here, they turned one of the most profitable and beloved gaming platforms into something that seems to be in a death spiral, people are already speculating they might sell the whole thing off eventually.