Yeah, but they were also still making new standalone gaming boxes with a dedicated OS, and they didn't have the Xbox division take the lead on game mode.

Linux and Mac gaming also weren't a threat, and the solution to a bloated Windows installation was more horsepower, which was relatively cheap.

Now the market is completely changed. The Xbox Series S and X have had their lunch eaten by Playstion and Switch. Linux gaming is exploding because of the Steam Deck, while more-powerful Windows handhelds are performing worse with worse batteries than the Deck because of Windows bloat.

Mid-range GPUs cost more than an entire high-end gaming rig from 5 years ago, so high-end gaming PCs are rarer than ever.

Microsoft has to do something. And what they've chosen, for now, is to partner with Asus to launch a true Xbox-branded competitor to the Deck. To do that, they have to actually be competitive. There's 2 keys to that. One is Gamepass, and the other is moving Windows out of the way of the game experience.