During E3, Xbox head Phil Spencer teased that his team is deep in development of "the next Xbox consoles." The pluralization of that word has had people wondering exactly what sort of shake-up Microsoft has planned, and today we may have our answer. According to a report from tech site Thurrott, Microsoft has two consoles in the works.
The first console is expected to be a relatively traditional follow-up to Xbox One: a more powerful box that plays games much in the same way every past Xbox console has. The second console is a bit more experimental in nature. Microsoft is reportedly planning to launch a much cheaper option that works in tandem with a cloud streaming service, codenamed "Scarlett Cloud."
This second box will feature much lower specs, as most of the hard work will be handled by Scarlett Cloud. The box itself will handle things like controller input, image processing, and collision detection, while Scarlett Cloud handles the rest. In theory, this allows for cloud streaming gaming without bothersome latency issues. The idea is that part of the game is running on your console, part is running elsewhere, and the Scarlett Cloud stitches it all together.
From what Thurrott has heard, all next-gen games will work across both devices, so you don't have to worry about missing out on higher spec games if you choose the lower spec console. Both devices are expected to launch in 2020, although the streaming console is apparently further along in development.