Maybe I'm just dumb but for me there should be three tiers of Windows for home users:
Free - a free version where they can stuff you with as many of their stupid offers and commercials they'd like
Home - pretty much the same as now.
Pro - a version where you already during installation had far better control over which software got installed, how you would like your updates, which services you would like to integrate with windows etc., where you would never have change browser preference after each major update etc. Where group policies aren't some hidden away feature which might break windows, you could decide where the start menu and task bar is located etc.
Then they should be far more transparent with their subscriptions. Why not simply at the frontpage at the Microsoft store have a area for their own subscriptions based services:
Onedrive: $XX.XX
O365: $XX.XX
Co-pilot+: $XX.XX
X-box: $XX.XX
Save XX% by buying multiple subscriptions.
If they offered proper tiers, I think it'd be more like this (at least for US editions):
Free: Completely unsupported base edition for PC builders and free/open-source software users and developers. No bundled MS apps, no media codec licenses bundled, no PDF support etc.--but they can allow sponsors to present offers for additional software during setup (antivirus, VPN, etc.) Edit: If MS were smart, they'd also offer a free 'Developer Edition' of this SKU optimized for development work and bundled with their Visual Studio Community edition IDE, Dev Essentials and MS Learn, with additional dev tools and cloud services available via subscription.
Creator edition: Think of this as a more useful Home version with more Pro features. Bundled media codecs and optimized for content creation, live streaming, optimized schedulers for higher core counts, more AI fluff etc. I'd think they'd sell this version as a licensed subscription bundled with some of their '365' apps. Can upgrade anytime from Free. Can also be sold with a volume license for power users that want to deploy a custom image on multiple machines.
Gaming edition: A more useful Home version similar to Creator and optimized for gaming. This is the only version that should be bundled with their Xbox game bar and other xbox branded crapware. Should also be sold as a licensed subscription bundled with the base 'Game Pass' subscription. Can upgrade anytime from Free. Can also be sold with a volume license for power users that want to deploy a custom image on multiple machines.
Home & Office: Think of this as replacing the current boxed 'Home and Pro' + OEM editions. This would include basic MS-branded apps and services that are typically bundled with Windows and should be targeted at people buying branded computers or general audiences and non-techie users (i.e. people 65+ or first-time computer users in grade school.) Sold as a single machine license (no subscription necessary). Can anytime upgrade to Creator/Gaming whenever users are ready.
Enterprise: For office users and distributed only via IT departments using Deployment Services, etc.