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Why should they be focused on it? Xbox is now just a slimmed down Windows pc. You can play the exact same games on a pc, with access to the same storefront.
What’s the problem exactly?
Microsoft’s original plan was to own the living room the way they own the office space. Not just gaming, but all your movies, TV, shopping, etc. could be done through the XBox.
Kinect was a particularly big jump in that regard. There were demos of AR-type stuff where you could see yourself wearing clothes you might want to buy. You could move around and the clothes on screen would move with your body. There’s some promo videos of that, but nothing concrete ever came of it.
Now they have slagging sales for two generations, and a AAA industry that struggles to make a real hit and is laying off a lot of people. They can’t even hold onto the core gaming market much less get their tendrils into the rest of the living room. They then release a handheld that’s basically an upgrade of an existing handheld that wasn’t selling very well, but now with XBox branding.
Is this a problem for the rest of us? No, not really. There’s plenty of alternatives, and we don’t need to care. Is this the result the money people at Microsoft envisioned when they started this ~25 years ago? No, not at all.
For wanting to own the living room, they never tried particularly hard. PS3 was a damned successful blueray player. They just needed to give you a nice, curated experience and ease of use. There were literally people buying PS3’s because they were cheaper than blueray players at the time
Yeah, Sony is just better at this. They’re really good at taking advantage of their competitors’ mistakes.
We forget a lot now, but the opening of the PS3/Xbox 360 era looked like Microsoft was winning. Sales looked good for them, Blu-ray be damned. Then the Red Ring of Death hits. In some ways, Microsoft has yet to recover from that. Sony held their face just above the toilet water ever since.
The end goal of all of that is to sell software. If they can do that without supporting a massive pipeline for selling custom hardware, that makes sense.