A PC, supposedly being able to replace OS, would be counterproductive as it would "disturb" Xbox closed ecosystem if successful. Something locked like a modern android smartphone would be a bit more conservative, but still dangerous if successful.
At this point the most closed/safer option for Microsoft is to simply roll out a mobile Xbox (protected and customized hardware to make impossible to use as alternative). Microsoft could sell at loss, and they could decisively go below SteamDeck price and count that "sleepy Valve" wouldn't counterattack with anything.