What Microsoft needs to do is look at how Apple manages their sub-$1000 computing line, ie the iPad.
Here you have a ‘good, better, best’ lineup at the $400, $600 and $800 price points where customers are willing to forego a level of control for increased stability.
If they had 3 Surface options at these points they could directly compete with the iPad.
Although Windows on ARM has traditionally not really worked I know that from my years in consumer electronics sales that people don’t do anything more than write and browse on a $400 machine. Gamepass streaming takes care of any gaming needs.
Microsoft could offer a Snapdragon-based Win11 device that runs 365 applications and also Android apps for $400 and it would sell. They then work with Intel on a SoC suitable for x64 models at the $600 and $800 prices.
All at once this streamlines the selection and offers customers a clearer idea of what is available whilst also I feel making the case that low-cost ARM-based Windows machines have a future.