There's a lot here, and yes, the total addressable market for the Steam Deck is currently less than either Switch will sell in a single quarter, but the video game market is a very different thing now than it was in early 2017. The Switch was the only game in town; now it's not. Live service games make up a significant amount of what the average consumer wants, and those customers largely play on PC for all sorts of reasons. The Switch 2 is no longer priced cheaply enough that it's an easy purchase for your child to play with, abuse, and possibly break. The console market in general is in the most visible decline it's ever been in, also for all sorts of reasons, and those handhelds from Sony and, at least, Microsoft are likely to just be handheld PCs as well.

Development on blockbuster system sellers has slowed way down, which comes hand in hand with there just not being as many of them, which makes buying yet another walled garden ecosystem less appealing. This walled garden has Pokemon and Mario Kart, so Nintendo's not about to go bankrupt, but if we smash cut to 8 years from now and the Switch 2 sold more units than the Switch 1, I'd have to ask how on earth that happened, because it's looking like just about an impossible outcome from where we stand now.

Also, there's this quote:

But, although Microsoft has now been making Xbox consoles for over 20 years, it has consistently struggled to use that experience to make PC gaming more seamless, despite repeated attempts

Look, I'm no Microsoft fanboy. Windows 10 was an abomination that got me to switch to Linux, and Windows 11 is somehow even worse. The combination of Teams and Windows 11 has made my experience at work significantly worse than in years prior. However, credit where credit is due: Microsoft standardized controller inputs and glyphs in PC games about 20 years ago and created an incentive for it to be the same game that was made on consoles. It married more complex PC gaming designs with intuitive console gaming designs, and we no longer got bespoke "PC versions" and "console versions" of the same title that were actually dramatically different games. PC gaming today is better because of efforts taken from Microsoft, and that's to say nothing of what other software solutions like DirectX have done before that.

Still, the reason a Microsoft handheld might succeed is because it does what the Steam Deck does without the limitations of incompatibility with kernel level anti cheat or bleeding edge software features like ray tracing (EDIT: also, Game Pass, the thing Microsoft is surely going to hammer home most). Personally, I don't see a path for a Sony handheld to compete.