Sorry, but that is just not true in a practical sense. Take for example Blockbuster. They went under because of redbox. You could easily have said that all they had to do was start their own mail based rental. And they actually had that for a short time. But what you have to realize is that Blockbuster was bringing in 3 billion gross annually. Redbox revenue in 2010 when blockbuster went under was something like 50 million, and even today it is only 500 million. Blockbuster could never compete with that. Management would never accept a 90% reduction in pay when they could move to another company and cannibalize all the assets on their way out. Blockbuster shut down their mail order movie service because it was decimating their revenue, which was mostly driven by late fees.

Sears went under because of Amazon. They also had an online store for a while. It also undercut their business model. They tried having lower prices online to compete with other online retailers, but people expected to get the same price at the store. That is not economically viable. They tried to have discount brands online and higher quality and price brands in the stores. People expected the same guarantee as the store products and expected to do returns at the stores, online retailers did not have that problem. In the end they couldn't even pivot into only online even though they were originally only mail order.

There is a concept in business called "grown or die". In hard times you can cut fat and restructure debt and become more efficient, but you can never go back to a younger state of the company. Just like you can hit the gym at 60 and be much healthier, but you will never turn the clock back and be 25 again.

Microsoft grew past operating systems a long time ago. Their buisness model is data gathering and social engineering, just like google. The are not offering an AI app for people as a product. They want you on their system, using their AI so they have access to you. They are happy to lose money on that. The subscription is just there so you feel invested in their AI and keep coming back. If it were free you would not feel any pressure to use their AI over any other, but if you payed for it then you feel, not only that it must be better because you had to pay, but also that you already paid so you might as well use it.

They can never again be a company that makes operating systems and competes with linux. But they are definitely not making any mistakes with AI. People just don't understand the game.