I think people are reading this backwards: they are more likely bringing Windows games onto the XBOX OS rather than bringing XBOX Games into Windows.
They can do both things easily (Plays Anywhere!) but if they do the latter there is no reason to do XBOX hardware and they already said, repeatedly, there *will* be a new generation of XBOX consoles.
Maybe they do both.
But the best play is to keep the gaming-only consoles as the low and mid end and deliver an XBOX compatible subsystem for Windows at the high end. Brings both Windows and XBOX into a unified ecosystem and dashboard but addressing two distinct markets. Because as Spencer said, you're not going to grow gaming with thousand dollar consoles.
Everybody is so focused on current gen console sales they forget that a ton of people are refusing to upgrade; on XBOX and PS. And on XBOX, you have cloud to console streaming to play current gen on last gen boxes. So maybe instead of thinking of XBOX as a 30-50M box platform (which ain't chopped liver) the addressable market for XBOX games is more like 60-80M+ including cloud.
Because, one more time: XCloud streams XBOX games, not PC games. The more gamers adopt cloud on TV, tablets, phones, or browser, the bigger the market for XBOX versions of games and, of course, for Game Pass. And developers that want to reach cloud gamers need to support XBOX. And the new "stream what you buy" initiative is an extra incentive to look beyond new box sales and look instead to the number of gamers.
Finally, The one question nobody has bothered to consider is what exactly Bond meant when she said they were working on *forward* compatibility.
Might it not mean making current hardware compatible with next gen games? And if they do, maybe the SX stays on the market as the new entry level XBOX and the new box at $600-700 becomes the midrange and gaming PC become the high end XBOXes.
Answer that question and you might see what exactly they are up to.