That might be more palatable to many people, but it wouldn't do a thing for me -- mostly because I actively do not want frequent Windows updates, Microsoft AV updates, MDM functionality, or any OneDrive storage at all.
Well you're not alone in that, but I doubt you represent "most people" either. Most people with Windows do want Windows updates and access to the latest versions of Windows and Office. Many want some kind of "Dropbox"-like service, and don't care an awful lot what the particular service is. And most people who know what they're doing would like some level of MDM-- if only device tracking and possibly patch-management type stuff. Actually I would say that those things are becoming pretty much a requirement for most of the small businesses that I deal with, though most of the individuals I deal with don't necessarily understand what these things are.
But I also see a possible objection in that Microsoft shouldn't tie all these things together, but should continue to offer them as separate services. That makes sense to me. I'd hate to have to subscribe to all of those things just because I wanted one of them. But I don't think your objection holds up very well, because I'm suggesting that Microsoft should offer a perpetual license to Windows and Office for $100, which includes 1 year of all the updates, plus a couple of services that you can use or not. Still, getting Windows and Office for $100 isn't a bad deal. Continuing to use those services and continuing to receive updates would require that you pay the $100/year subscription.
Now, whether that exact pricing works out, I don't know, but I think it's a general model that would work for a lot of people, for both personal and business use. Speaking more generally, I think a lot of people are turned off by the idea of a "subscription" where their computer stops working when you stop paying a monthly fee, but the idea of paying a subscription to continue to receive updates is less objectionable. If you could wrap together most of the services that people actually want, along with a subscription for continued updates, all under a single reasonable monthly/yearly fee, I think Microsoft would do well. But I think all the product activation and DRM, and making things expire when you don't pay... it all just creates more confusion and annoyances for personal users, and more headaches for IT personnel. And I also think they should provide basic security updates no matter what, insecure installs only make them look bad, and hacked machines cause problems for everyone online.