XBSS is made to be sold to people that would very reluctantly pay $400 and never $500 or more for a console. MS made it probably to obtain a user base as large as possible as quick as possible, and also to push Game Pass.
Its negative side effect is not lower revenue on HW, even less lower profit, as both Sony and MS consoles are sold at a loss initially, but that low budget games will probably have just the low-performance version on XBS, and XBSX will get that too. Once decided to make such an underspecced entry level console for the XBS archirtecture, this bad effect can't be avoided anymore, so MS will better sell XBSS in numbers large enough to justify it, otherwise it will end up being just a thing that damaged XBSX with nothing in return.
The whole Series S justification hits a big wall which is the lack of disk drive. You want a buget console but have to pay games at full price and cannot buy used games or sell your own games is the opposite of a budgetfriendly console.
And yeah you can have the Game Pass but will have to pay every month + the games doesn't belong to you.
So IMO the Series S fails at several levels and won't nearly sell as much as the Series X. (1/3 or even 1/4 as I believe the current numbers are heavily tied to the stock issues of the Series X)
Yes, the bad side effect on the full-fledged XBSX made me totally overlook XBSS' biggest flaw, the one that directly affects it. MS could mitigate it only conceding the freedom to choose 3rd party digital marketplaces, to at least be able to look for the best price on new copies, but I guess it wants to push Game Pass (or any other 1st party GaaS it will launch in the future) more than anything else.
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