Not sure the title has the right framing.
It's hard to compete with AMD which is the only tech company to offer both x86 and a solid GPU technology that comes with it.
On top of that you have backwards compatibility woes and the uncertainty around Intel being able to deliver on its foundry.
All in all, this win would've been a great deal for Intel's foundry in PR, but money wise those were never going to be huge sums.
Intel's Arc GPUs are quite competent (especially with the highly necessary driver updates). If Battlemage fixed the hardware scheduling design flaw, Intel has a decent shot at competing with AMD.
If AMD continues to lose ground on the desktop market and Intel continues to advance with Arc, there's a chance the PS6/Xbox Series 360 will run on Intel instead of AMD.
AMD also has a track record for Sony and consoles in general dating back to the game cube and delivering success. Maybe not the fastest thing but one that works and is reliable. Nvidia, IBM and Intel don't exactly deliver on the full suite either.
> both x86 and a solid GPU technology that comes with it
If only Project Denver had kept its original goal
Backward compatibility guarantees is a significant one, I think. A lot of the QA process for console games is predicated on testing against a fixed set of hardware configurations, and various race conditions and other weirdness can start crawling out of the woodwork even with modest changes. This has been seen on many games running on emulators, on hacked console firmwares that allow overclocking (e.g. by running the CPU at the "native" clock speed in backward compatibility mode), or with framerate unlocking patches.