While Microsoft has certainly steered the Xbox ship away from the murky waters which plagued the Xbox One at launch, there have also been key factors which have also created unsavory challenges for the Xbox manufacturer.

Microsoft announced its financial results for Q3 of fiscal year 2026, including an update on its gaming Xbox business and more.
Not looking good. Hopefully Asha Sharma is able to turn Phil’s disaster around.
To me it's still quite remarkable how they can cash-in 5.3bn in revenue in a single quarter, since their hardware is basically dead.

Spiders: "We're going to cut straight to the chase so you're not left wondering: After a long period without clear answers, we have received confirmation that Spiders is being liquidated.
What does it mean? This means the company as a whole no longer exists. We'll cease our functions immediately. The planned DLC will release via Nacon, and then-- well, that's it.
We're sorry that it's come to this and would like to thank each and every one of you for your support over the years.
If you have any questions or run into issues with your games, please contact Nacon directly as we'll no longer be able to reply."
I think XbScarlet does. They've got new first party studios, no doubt a beast of a powerhouse next gen console, and I'm sure they'll want to launch before Sony. Sony can't afford to let up and rest on their laurels. But XbScarlet will need killer exclusives to go up against the Sony First party Juggernauts that will launch alongside the PS5. Sony will likely still push VR next gen and so might have the edge interms of ancillary value for the PS5.
If the $99 next gen Xbox is true then they should have NA on lock, but Europe/Japan might still be a challenge.
Sony has dominated this gen and three of the past four. They have the advantage in terms of first party infrastructure and VR. But MS has immense resources and the motivation of being embarrassed this gen. Of course they have a chance next gen, but i think they realize that unless Sony makes a huge mistake they just can't go toe to toe with them the way they attempted to this gen or they are likely to get outclassed....again. MS needs a different approach, a niche, and they know this. If MS is successful it'll be through a different strategy. Streaming, GaaS, PC, this is their chance. But releasing another expensive console head to head and getting trounced in the exclusive games category yet again is not a likely recipe for victory. It's not just Sony, Nintendo is booming as well.
Do they have a chance? Yes.
Are they the front-runners? Hell no.
Not in the worldwide market