Sony won a whole console generation on not being knobheads (as much as MS).

I wonder if MS could eat their lunch in the same way, or if the market has changed enough that it won't matter.

I can't see how. Or, well, I can see how, but those options are so radical compared to what console gaming is today that nobody would even dare suggest it in a boardroom. Things like:

* Allowing resale of digital games

* Transferring game licences between platforms (so now you have all your Steam games on your Xbox (at least those that run)

* Developing a new disc format (or other physical format) and locking in that for the next gen

* Just buying a blu-ray factory or two to secure supply and locking in and promising physical releases going forward (and then living up to those promises, which isn't going to be easy with bean counters breathing down their neck)

These are massive asks in the current reality, so I can't see MS bothering. Xbox already seems to be living on the edge of relevancy. It seems more likely to me that they just won't bother any more and relegate it to a brand for what remains of the gaming part of Microsoft.