That "snek" thing really fucks with my head because my brain sees it as a typo of "snes".
Let's say, irrespective of any competition between Sony and MS, that there is simply a large enough userbase with Minecraft, Fortnite, and Roblox for the Lockhart to do well on it's own mostly because of value pricing.
In my estimate, the Lockhart exists solely for it's value pricing, so MS should be going as low as possible, not looking for a $349 mid-range system. If it can't be cheap then it shouldn't exist.