Why would anyone buy one? Every parent in America knows their kid would hate them if they unboxed an Xbox handheld instead of the Switch 2 on Christmas. Not to mention, the Switch 2 is cheaper, easier to operate, has a library of kid-friendly and hardware-tailored games, and doesn't partner with Snoop Dogg to market the product. You're left with a small market of enthusiast and hardcore customers that probably treat your product like a novelty instead of a real competitor. It makes sense why Microsoft doesn't really care.
Xbox owners don't want one because they can already play Game Pass stuff. Their money is better spent on a Playstation or Switch. PC gamers also already have Game Pass, so if a bigger library is what they want then they should buy a Switch or Playstation too.
Ironically, if a Switch/PS5 owner wants to experience Microsoft's best exclusives, the Steam Deck is their cheapest option.