This could also be done by reading their forums, and reaching out to people.

For example, I have an XBox One controller. It used to pair fine via Bluetool. It still pairs fine with my Mac. Other stuff still pairs fine with my PC. But it just won't work after a Windows update.

What is telemetry going to tell them that they don't already know from the forum? Maybe the scope, but it's fuzzy. Some users might give up after one or two tries. Some users might be using the "Add hardware" box several times in a row for different reasons. Telemetry isn't a magic insights thing. It's difficult to get right, and to draw the right conclusions.

One thing's for sure, telemetry's cheaper than QA-ing updates properly.

Telemetry is generally a key component for quality assurance. While a paid tester can file bugs about "it crashes" or "it takes 10 seconds to load", a regression taking load times from 100ms to 200ms will be very hard (if not impossible) for a tester to notice and file a bug about. It will only show up in your telemetry.

You could argue that telemetry should then only exist in your beta channel or testing builds, and some developers do that. It's silly to argue everything can be caught by your QA team, that is simply not true for online services. In the past projects I've worked on have had long-standing bugs that took weeks of ongoing effort between both our paid QA staff and customers to finally identify reproduction steps, at which point we were able to examine telemetry for those reproductions and fix the problem.

I think your last point probably nailed it.

"Pairing is failing on device with A1B2C3 Bluetooth controllers on driver versions 8.2 and 8.3, but not 8.4"

"This is happening for 100% of users with the B2C3D4 controller and is likely a driver bug, but has happened only twice on the C3D5 device, both for the same user - likely a hardware failure"