I think you are missing some things here.
For Microsoft the Xbox hardware was always intended to be "aspirational" for PC owners and push developers to build better PC games. Even the name choice from "DirectX-Box" has always come from that relationship back to the PC (even with the brief side jump in the Xbox 360 era away from traditional PC hardware).
Just as the Surface line of hardware isn't designed to "replace" the PC but encourage innovation in PC hardware design.
For a really good example since you already brought it up: "the really fast SSD enables cool stuff" you mention with respect to the PS5 is a big part of the Xbox Series X/S hardware too. They are only sold with really fast SSDs and even the expansion slots only support those kinds of SSDs. (Some gamers have been upset by this that they can't just plug in any USB drive like on the Xbox One.) But also Microsoft also added a lot of that exact same "cool stuff" to Windows and PC games can use "DirectStorage" APIs to get some of those exact same benefits when PCs are built with really fast SSDs that support DirectStorage. But right now the easiest (and cheapest) to find "PCs" with all that hardware and configured correctly to use it "fresh out of the box" are: the Xbox Series X and Xbox Series S. (Even despite the supply chain issues.)
That's an interesting circle around the hardware: the Xbox hardware pushes PC standards that are aspirationally available sooner and easier on Xbox hardware. Xbox hardware puts "high performance gaming PCs" in living rooms in homes that might now otherwise consider a "high performance gaming PCs" while also giving those that love building their own "high performance gaming PCs" performance goals to shoot for and a baseline hardware standard to judge their gaming PCs by (is your gaming PC at least as good as an Xbox One X? do you have the RTX and NVMe SSD with DirectStorage support to hit Xbox Series X fidelity in Xbox Series X optimized games? etc).
Surface doesn't want to be the only PC hardware, it wants to be PC hardware that gives ideas to the other PC hardware companies. That sets benchmarks even for home PC builders to measure themselves. Xbox as a console seems to want to do the same thing: it isn't designed to be the last or only gaming PC in a household: it's designed to be the "first", it's designed to be easily accessible for those that wouldn't otherwise buy a gaming PC, it's designed to be the measuring stick for what a "gaming PC" means and give ideas to PC manufacturers of things they can also be doing. (And it is designed to keep Windows as the most innovative OS for gaming. Microsoft "wins" either way if you buy an Xbox or a gaming PC so long as it still includes Windows.)
(Personally, I tend to own a gaming PC for 7+ years and watch it slowly grow out of date with new releases, because a PC is also a lot of other things and stability is great. When I choose to play "keeping up with the Gamer Joneses", I do it by following Xbox cycles. The Xbox Series X does outclass my gaming PC on quite a few specs and I'm happy with that arrangement. I also like the fluidity that I often buy the games only once and can run them on my PC in the other room, at my discretion. Some games you want "latest and greatest looks on the couch" and some games you want the freedom to jump over to the other room and "slightly dated graphics fidelity but I just need to hop on the game from my desktop where I'm multitasking a TV show and a Discord chat in my PC chair".)
I have a lot more questions for what Sony's strategy is with current PC releases of games and that the PS5 is again back on "ordinary" PC hardware. They certainly don't "win" anywhere near as much by making their PC games available on Windows.