Microsoft officially announced a version of Windows 10 to primarily take-on Chromebooks in the education sector. Windows 10 S is centred on the Edge Browser, Office 365 applications and the Microsoft Store. The goal is to target schools with a simplified operating system that is secure, easier to maintain and whose performance is not compromised with low-cost hardware.
In the education sector, to maintain security, it is understandable that laptops need to be locked to known sources to simplify maintenance. Outside education general users may find the operating system restricting but I still think there remains a substantial user-base that will choose Windows 10 S. Windows 10 S works better with entry-level hardware (specifically with smaller storage) and the popularity of a capable entry-level laptop, as demonstrated with the HP Stream range, could mean many users find their needs better met, considering the limitations of low-end hardware, by a less resource intensive Windows 10 S.
The same case cannot be made with higher-end hardware. Other than the Surface, which offers a free upgrade from Windows 10 S to Windows 10 Pro, officially there will be a $50 fee to upgrade to Windows 10 Prov(the fee will probably be eventually waivered). I cannot see significant demand to opt for a more restricted operating system, on mid-range to high-end hardware, when a device's specification is capable of running Windows 10 Pro with no compromises. The added fee might further put-off users that view it as an unnecessary extra cost to a machine that is expected, for its price, to do more.
Even in the entry-level category, Microsoft might struggle against Chromebooks, whether in the education sector or beyond. Compared to the Edge browser, Chrome offers a richer catalogue of applications and extensions. Further, a wider selection of applications is further extended with the gradual rolling out of Google Play to more Chromebooks.
To make Windows 10 S work in the entry-level category, the main issue is if Microsoft can get third-party developers to develop applications to enhance the Microsoft Store. There is the possibility that Microsoft might revive 'Project Centennial' - a project aiming to renew the desktop PC - through converting desktop apps to universal apps that may be accessed via the Windows Store. Continuum is another example of Microsoft aiming to push the continuity of applications from the traditional desktop to other devices. At this moment, however, Chrome OS and its gradual integration with Google Play is the better option in both education and cloud-centric computing.