The Xbox Series S is the strongest point in your argument, but it's also the strongest in mine: the S has much weaker graphical power but it is the X's peer in processing. Processing is the divide, because graphics profiles can't overcome it.
Obviously software is scaleable, but the major appeal of consoles is that they're not. Everyone has the same (or close to the same) hardware, and games accordingly are reliable on it. That is an appealing factor for both developers and users, and it's the primary strength of dedicated "appliance" platforms over personal computers.
Speaking of computers, Microsoft has a monopoly in them. That's why Xbox as a brand is spreading to Windows, because they need to retain that monopoly more than they need to sell Xboxes. Valve continues investing in Linux gaming, so Microsoft is taking a new approach by acquiring countless key developers and locking down exclusivity, making any paradigm shift to Linux impossible via business as it becomes technologically viable.
Nintendo has no interest in the death of the console generation, because they do not own computing. Console generations let them sell sequels more easily, and it helps them sell hardware more easily. Generations may be dying for Xbox, but they remain key to the business model of Sony and especially Nintendo.
Returning to Sony, their late PC ports seem to me like a calculated sacrifice to get some additional revenue out of games that are by now established enough as part of their brand to not diminish it in their departure. I see nothing to suggest that generations are dead to Sony. COVID has simply resulted in some changed plans. Recall that many of the cross-platform first party games were announced as PS5 exclusives, only being reworked into cross-gen software when PS5 supply was so sharply restricted.
There is no hard evidence that the console industry is heading this way. Xbox may be expanding their horizons, but that isn't going to impact what is a highly effective model for Nintendo.