I can imagine them carrying on making consoles this generation but long-term Microsoft is a services company and over successive generations they have failed to recapture the lead from Sony since the 360. Ultimately, they just want to make more money and struggling in the hardware business is not an exciting place for them to be in.
I say this as a Series S owner: the writing is on the wall. I will likely not be purchasing another Microsoft console after this, though I’m not sure they’d be interested in releasing one. I want to buy and own games I can play locally on a piece of hardware, which probably means I have to return to Sony or go back to the humble PC. For anyone currently on the fence seeing this news, I don’t know why they’d consider buying into the Xbox platform and tying in all their gaming purchases.