If you have your entire collection of games on PS4 (or Steam, or Xbox), moving to a different ecosystem is a pain. Even if the console itself is cheap and they give away games, once you have everything in one place, there is little incentive to move away from your console of choice on the next generation. You have to differentiate a lot of your competition, (as nintendo does) but an xbox is basically the same as a ps5, just with 20 or so different games (exclusives).
That wasn't the case in the past. With physical games, I usually had more than one console, and depending on the price, performance, or other factors, I would choose one platform or another.
That's why I think they want to push PC and even TV gaming. Getting people into their ecosystem is the tricky part.
The console as hardware is actually great, probably better than the PS5, and really cheap for such a powerful computer.