Microsoft is currently hard at work on two new consoles under the "Scarlet" code name, set to launch a couple years down the road as the next generation of Xbox. However, that might not be all they're cooking up. According to a new report from Thurrott, they also have new hardware in development that's planned to launch next year as part of the current generation.
According to their sources, Microsoft is planning to release a cheaper version of Xbox One that doesn't include a disc drive, playing only digital games. As such, Microsoft is planning to partner with retailers to offer a trade-in deal that lets you swap out your old discs for digital download codes. By going digital-only with this device, Microsoft hopes to offer it for $200 or less, making it a cheap and easy way to get into playing Xbox for newcomers.
Additionally, Thurrott claims that Microsoft intends to launch a slightly modified version of the Xbox One S next year. This model is expected to be slimmer and cheaper than the current one, but it's not clear how that will be achieved. Thurrott does not expect it to ditch the disc drive like the other console, but they speculate that other features could be cut to lower the price and make it a cheap gaming machine.