I actually think that the abismal start of Xbox One wasn't their lowest point nor the reason for the current situation.
They had those awful policies like the always online, not sharing games, and a bad E3 presentation, but it still looked promising with big games like Scalebound, and they came from the success of 360.
Xbox had to fix that initial fiasco by making big decisions, and they did, but honestly, it was under Phil Spencer management when things went really wrong.
Instead of focusing on feeding the Xbox One with lots of high quality games, they disappeared. They started buying studios, backwards compatibility, gamepass... They tried everything but focusing on the only thing that matters: games.
A perfect example of this is the One X. Xbox One was less powerful than PS4, but... who cares? If it had had a great catalog, with a great Halo experience, a constant feed of innovative first party games, and great third party deals, people would be playing on Xbox One no matter what.
But no, they thought having a more powerful console with just a few games is a better idea. They also thought that buying studios is better than doing their own games. Turning their console into a "rent machine" is better than trying to compete with Sony as they did in the 360 era.
Sorry for the long post, it's just that I think the current Xbox division needs a change. And that's probably a Microsoft and Satya decision, they will have to chose if Xbox keeps being a console and competition to Playstation, so they start actually competing, or it becomes just a gaming service and publisher.