Game Pass adds a huge amount of value to Day One people. MS could easily explain the console prices with the many of the launch titles coming as part of Game Pass and not as a separate purchase above the console.
Well getting their PS4 library to PS5 will have a lot more value to many. Value isn't only about which option is cheaper, and XSX's launch titles on Game Pass are still only smaller games pretty much, with no certainty how those will even turn out quality-wise.
We don't exactly know PS5's launch lineup, but launch windows games are definitely looking better than what XSX has. You could also say that for someone just getting into PlayStation, there's way more of those dirt cheap, quality PS4 exclusives available through BC compared to XB1. They aren't that expensive from retailers, but you could also buy loads of them used and only spend a couple of dollars. This way you also get all of the games you want to play and you own them. Game Pass doesn't have all of the best current gen games.
Overwhelming majority of people just don't play 50 games in a year, and that's a fact. For me it has been something like 4-5 + Apex. Of course Game Pass is a good deal, but for several reasons most still prefer Playstation.