Dropping it would destroy the Xbox brand so they shouldn't but they should for sure lighten up on the parity requirement to help developers which seems to already be happening. If developers are having trouble with it now it's gonna be an absolute nightmare for them a few years from now unless they can do stuff like remove features to get it to run ok. As this gen goes on more and more Series S versions of big games will probably be increasingly cut back so it'll become known as the console that gets the bad version of games but it is cheap so you get what you pay for.
Long term I do think the Series S will be a mistake since it's looking increasingly clear that when there is proper stock for the better consoles that it doesn't have that much appeal but it did help out when there were huge stock issues so it was good in the short term at least. I imagine that aside from that it's not been as popular as they hoped.
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