Who is the Series S aimed for?
This thing will be discontinued within two-ish years.
People trying to compare this to anything Nintendo are silly. The Wii was a revolution to some, got Grandma to play *Nintendo* games (controller was the TV remote they had been using for 50 years). It was something completely different, and something even Nintendo, obviously, didn't fully understand themselves given the WiiU (a lesson in why branding is important -something Microsoft has already failed at, imo). Microsoft already tried to appeal to this casual crowd and failed. So, Microsoft are not competing in that category.
The Switch is less revolutionary, but it carries the Nintendo legacy of "I'm buying this for Nintendo games (which are guaranteed to be fantastic, if not GOTY) and the smattering of third party exclusives." Microsoft is not in that category, not even on the same plane of existence, not even capable of reaching it. Sony has had years building 1st party, and they're not even really close. So, Microsoft are not capable of competing in that category.
Gamepass already exists, today, right now, and Xbox consoles are not exactly flying off the shelves even at deep discounts. So, Microsoft are not going to attract the "Fifa/Cod/Fortnite" crowd with this because they can't get them now.
So what is left? Who is left? Third console buyers that want to play their 360 games. These people will be buying a Ps5 first (or they have a PC), plays enough games to grab Nintendo's offering second, and they still have the disposable income to mess with their old 360 library they abandoned this gen. This group is not large enough to matter. Microsoft will find themselves, eventually, discontinuing this and slashing the price of the top end when feasible, imo.