It help MS for the fact that it's their exit plan from the Xbox Console Model & into a Windows Device Model.
What exit plan? Do you have a source?
I don't doubt that the intention is to marry their devices together, because that makes sense. But it's a huge leap to suggest it's an "exit plan".
There's no reason why a dedicated console and PC cannot co-exist. There's a separate market for both, only now brought closer together. which does have it's advantages if done correctly.
Microsoft have said they are making a new console, not the opposite.
And the PS4 playing third party games better than the Xbox One plays a role in that.
That's the thing though, it won't be a "real next gen upgrade" since it would release a shorter amount of time than the typical length of a gaming generation. What's considering acceptable in 2016/2017 wouldn't be the same as what would be in 2019/2020.
As someone else has stated, it will cause some current Xbox One owners to upgrade and it would cause some people to buy it instead of the PS4 if they care about playing the best running third party games within the console space.
Your questions could be stated for a typical slim model. We've seen slim models of consoles help sales in the past when they were nothing more than the same old console with a new design. If those models helped sales, then why would it be impossible for a slim model that also had a bit more power to run the same current gen games better have absolutely no purpose in comparison?
But at what point does a console become a "real" next gen console?
Obviously the longer you wait, the bigger the hardware jump becomes possible. 4+ years is still a long time in the computer hardware world to get a significant upgrade and be worthy of the "next gen console" title.
If you release a console that's only slightly better than a PS4, is it really going to change anything? Is it worth it?
Is it worth keeping the Xbox One name with all negativity that surrounds it?
Or is it better to make a clean jump with a new name, a significant hardware jump and a whole new marketing campaign?
Not just, "Hey guys, we've updated the Xbox One a little bit, please buy it".
It seems like a lot of effort to me for little reward, if any. More than that, I think they would be ridiculed. An Xbox that's only slightly better than a PS4 several years later, and you only have to buy it twice to get it? Come on.