Does Microsoft actually say that they failed in the console space? That would be kinda wild if they insinuated that.
Why is it wild? They realised that going head to head on console sales again PlayStation was a fight they would struggle to win. Refocusing their business model to prioritise subscription revenue by setting up a game library service was a move no one had been aggressive with. They had the server infrastructure, some of the dev studios, and the cash to expand their content pipeline, build, and then grow the service.
They started playing a different game instead of losing the same one my a different margin every 5 years. And whilst people were still making jokes about console sales not being a KPI, they were well on their way to building a service that will now be very hard for anyone to compete with.