It's actually a really good price. The problem is people devaluing space. Not a single person who buys and Xbox actually needs that much storage, let alone SSD storage. I have yet to see a person who constantly switches between 20 big games. Large SSD storage is still very much premium, otherwise I would've switched to SSD for my long time storage a long time ago. My next high end gaming PC won't have more than 1TB for storage.
I even had an external 2TB HDD connected to my Wii U because I easily get bored with a game and need to switch out out for another one. I'm juggling 2 128GB SD Cards on my Switch. I have an external 4 TB HDD to my Laptop for my games. Keep in mind I'm mostly playing indie Games which don't use that much space. I just need to switch games often, and to do so, I need enough space for all of them to fit.
So, while I won't buy an Xbox anytime soon (what's the point if you have a gaming PC?), having more space is always useful.
Also, I expect that games grow quite a bit over next gen. Bigger resolutions and bigger screens will also need bigger, more detailed textures, which certainly will bump up the space a notch or two. Add to that the Raytracing, and a 500GB SSD like in the Series S might fill up very quickly in a couple years
The Nintendo eShop rating Thread: http://gamrconnect.vgchartz.com/thread.php?id=237454
The Steam/GOG key gifting thread: https://gamrconnect.vgchartz.com/thread/242024/the-steamgog-key-gifting-thread/1/