what’s an Xbox even for anymore?

PC-ifying the console market, same as always. A task it has almost completed.

Sony exiting the console market would be failure. They've been using the PS1 playbook five times in a row - seven or eight if you count handhelds - and it's worked, at most, thrice. Sony's ideal market has games developed for a specific platform, and occasionally ported outside it, so each vibrant fiefdom has its own identity and culture. That made them a mountain of cash on PS1 and PS2 and then nearly killed the PS3.

Developers' ideal market is making the game once and selling it to all customers. Platforms are an obstacle. Sony's ideal was fucked as soon as RenderWare looked the same on any console or PC. Microsoft got the message and made the 360 a generic compiler target. Sony almost shipped the PS3 without a real GPU. It took them years to stop fucking around and offer libraries to make their tiny special supercomputer act like any other computer - and that got them better ports, and made them more money.

What followed was two and a half generations of lockstep releases for near-identical AMD laptops. You can buy the blue one or the green one. Yet I don't think Sony really internalized what's happened until the Helldivers situation. They suddenly demanded every PC player get in their console ecosystem, because they recognized how much money they could make being a generic publisher, and it scared the shit out of them.

Microsoft exiting the console market would be... what they've been planning for a decade, probably. Somewhere after the Xbox One, I mused that they could upset the console race by not releasing an Xbox Two, and just treat the upcoming PS5 as a slightly broken PC. They seem to be getting around to it. Albeit with a side of releasing a Steam Deck competitor, because they love showing up late to a trend.