What does killing the Series S look like? A very large chunk of the Xbox Series install base are Series Ss. Microsoft is not going to be telling them they aren't getting games anymore, it's too large of a crowd for them to alienate. What incentive could Microsoft give them to upgrade when they could just buy a PS5?

Microsoft also has an incentive to keep selling the Series S to keep the pressure on game developers to develop for it. It's a lot easier for them to demand feature parity when half of their install base is using the weaker console.