I was thinking what if MS' strategy is to get the S to be really really cheap... $199 with deals this holiday while keeping Scorpio $450-500? They want to sell as many Ones as they can so it's important for S to sell. S users can later on 'upgrade' to scorpio when it's then the bottom-end sku? The only way for them to expand the user base in a meaningful way is with the S at this point.
This could make sense IMHO - make the S the Trojan Horse to get the marketshare back up