The problem is that Microsoft put a saddle on the car by offering physical discs. I really didn't see the point of it if it was always online, given that MS has their music and movie stores.
Moreover it didn't really give consumers the main benefit of always on DRM: lower prices for games. This is why consumers don't care about the DRM on iOS or even Android.
Another major problem is that for all the features offered for Xbox One that apologists like to keep repeating (family sharing, trade-ins, lending, selling), there was a really big caveat: publishers have to approve that feature for their respective games. Even if they did approve it, I can imagine all the restrictions they would have imposed (trade-in approved stores, minimum time & publisher set prices for trade-ins, and so on)
physical discs are useful for people with always-on-but-still-painfully-slow internet, and it also was a way for MS to compromise and not piss off all the physical disc retailers, who happen to be the same people who will retail the console itself.
Ask Australia if they'd like to download one game a month and max out the allowed data on their internet connection. Data caps are still common, and for every marketplace that has them, a digital-only marketplace is DOA.
To be clear, Microsoft still can have both the "horse" and the "car" with the Xbox One, just as they can with the Xbox 360. Removing the unnecessary restrictions on physical discs doesn't have to change the digital distribution gaming platform one iota, allowing the Xbox One to have both the Steam model and the classic game cartridge model. If Microsoft provides a compelling case for the Steam model (which can simply be "not having to get up to switch discs"), people will use it.
Moreover it didn't really give consumers the main benefit of always on DRM: lower prices for games. This is why consumers don't care about the DRM on iOS or even Android.
Another major problem is that for all the features offered for Xbox One that apologists like to keep repeating (family sharing, trade-ins, lending, selling), there was a really big caveat: publishers have to approve that feature for their respective games. Even if they did approve it, I can imagine all the restrictions they would have imposed (trade-in approved stores, minimum time & publisher set prices for trade-ins, and so on)