I think there will be another generation or two of hardware from Microsoft but the design and scope of these devices will be very different from what we have seen up to this point as they will no longer attempt to "outconsole" Sony or Nintendo.
As these devices sell less over time, I think they hit an internal tripwire and will then be quietly discontinued.
I will submit I also think it's possible that Microsoft keeps making hardware, but produces something more boutique and niche that is more focused on accessibility and versatility than power, performance, and innovative tech. The days of first party being used to showcase the power and features of their hardware are done at Microsoft, but they may still use hardware as a vector to get people into their gaming ecosystem.
As these devices sell less over time, I think they hit an internal tripwire and will then be quietly discontinued.
I will submit I also think it's possible that Microsoft keeps making hardware, but produces something more boutique and niche that is more focused on accessibility and versatility than power, performance, and innovative tech. The days of first party being used to showcase the power and features of their hardware are done at Microsoft, but they may still use hardware as a vector to get people into their gaming ecosystem.