You didn't actually answer the question. . What does MS gain? Do they gain sales?
For phones etc. it makes sense because their are other players constantly offering new options. We also see lots of them struggling to make money because they keep spending on rolling out new products with thin margins but consumers don't flock en masse to upgrade. They have to upgrade yearly to attract those who'll be upgrading that year, who'll buy a rival if they don't.
The console market is a 2/3 horse race. If rolling out a new machine doesn't improve your sales versus your rivals, there's no point, and I don't see that being faster is enough to shift masses of future shoppers from PS4 to XB1XS Deluxe Platinum Hardcore Edition. Nor do I think it's enough to sway a lot of would be XB1S buyers who look at it and think, "I'd get one but it's not powerful enough, so I won't get any console at all." I'm open to arguments against this, but you need to present a case as to what MS gains IMO. "May as well, they've nothing to lose," isn't a great reason to invest in a major product undertaking!
Well, yeah, I think they could gain sales. Or lose fewer. However you want to see it.
You leverage a number of already developed technologies - e.g. CPU enhancements, clocks and power efficiency across the board - and "brand synergy" (or some shit like that) with the well viewed X1X to continue the move away from the botched X1 Phat launch.
Instead of continuing to sell the X1S for the next 3 ~ 4 years, you make something that's a slot in replacement that's better across the board and more desirable (higher frame rates, enforced aniso, higher dynamic resolutions, faster loading, better BC experience, more responsive apps) but re-uses already developed technologies. And you do so without increasingly manufacturing costs significantly (same or smaller die area, same memory quantity, smaller board, fewer traces).
Even with a $499 bruiser, you still need the best possible $250 product, and if you can draw on the already developed $499 product to help develop and market that, it has to be worth considering.