I would say that there are two things that Microsoft erred on early on in the generation.
They opted to put more Series X consoles for blades for the cloud than putting them in stores. That has borne itself out to be an incorrect decision.
They still do this one, they do a horrible job with localization of their software/combined with advertising.
Outside of that, there isn't anything sway from the position that Microsoft isn't on the path that they want to be on.
Everybody keeps focusing on the console. Microsoft just so happens to make a console that plays games. They are also day and date on PC.
The biggest thing is the wait till next year mantra. It sucks but it's real. Games take 6-7 years to produce nowadays. When Microsoft acquired Inxile, they were finishing Wasteland 3, a multiplatform. When they acquired Oblivion, they were finishing The Outer Worlds, an multiplatform. They can acquired Double Fine, they were finishing Psychonauts 2, a multiplatform. You can't just snap your fingers and a new game is produced.
They were just publisher of the year in 2021. They need to get on a cadence with the games. A regular release cadence. Their IP library is too strong now.
They can do this whatever way they want to. In the end, they are still going to be the highest earning company in gaming. Isn't that the name of the game? Consoles are just the razors. Games are the blades.
Lastly and this is one thing that has struck me as interesting. I used to think that people were tied to their digital libraries. Some are but some aren't. Earlier this year, the Sony CFO said that a third of the PS5 owners did not own a PS4. However, Phil is probably right, winning in console sales has probably sailed on. However, making the most money is definitely in play here and they stand in solid position to do just that.