The Shrine

This year Microsoft has been shutting down game dev studios like crazy: BigPark, Function Studios, Good Science, LXP, SOTA, Press Play, and most recently Lionhead Studios.

But that's not the only clue:
Earlier this month, Microsoft announced they were merging their Xbox platform into Windows so that future Xbox One games will also be playable on Windows.

Finally, the performance of Xbox One has been poor. Not nearly as poor as Wii U, but certainly much worse than 3DS and PS4. Microsoft's bottom line could benefit much more by putting their Xbox resources into Windows, than they would having a separate Xbox platform.

Another possibility is that the next line of Xbox's will be PC hardware.

Probably maybe, they may chase after that Steam machines market that never really picked up much traction, but with traditional Windows OS instead of weird Linux OS which probably turned alot of people off.

Doesn't seem likely to me. Lionhead has been tanking since the departure of Molyneaux (arguably even before). The rest of the studios are more indicative of the failure of the Kinect.

As a brand, Microsoft has no reason to abandon the Xbox. They tanked because of severe missteps leading to launch. Even then, they still destroyed Nintendo.