Yeah, no.
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It’s a compelling proposition, and not one Microsoft can compete with. At least not in the mobile/tablet space. Cloud gaming is all well and good, but native hardware will always be superior. Microsoft is crazy not to be considering a 1st party handheld like the steam deck. Or at least a gaming-centric UI for small screen devices. Even just integrating something like the Xbox UI would be an improvement.
I think they’re banking on the handheld PC market picking up for that. Obviously Steamdeck was a non-starter for native as it uses Linux, but they threw their weight behind the ROG Ally and packaged that with several months of Gamepass.