Sources: Microsoft working on two new Xbox consoles, one of them a lower-powered streaming box for upcoming game streaming service referred to as Scarlett Cloud
Back at E3, Microsoft mentioned that they were working on a next-generation console. At that time, I noted that this new console …
Context & Ripple Effects
This report lands weeks after Phil Spencer told E3 that Microsoft was building a game streaming network to bring console-quality gaming to any device (Spencer's streaming-network pledge). Pairing it with a next-gen console already announced for development, Thurrott's sources sketch a two-track hardware plan: one high-end box, one cheap device whose main job is delivering Scarlett Cloud streams.
The arc that follows validates the leak's shape: Project Scarlett was formally detailed for Fall 2020 (the Fall 2020 Scarlett reveal), a cheaper disc-free sibling codenamed Lockhart surfaced months later (the Lockhart leak), and by 2022 Microsoft confirmed an HDMI streaming stick, Keystone (Keystone confirmation) — the streaming-box idea surviving long after the Scarlett Cloud name did not.
First-order effects
- Microsoft's next-generation lineup would launch as two SKUs rather than one, giving retailers and buyers a low-cost entry point alongside the flagship console.
- A dedicated streaming device makes Scarlett Cloud a first-class product at launch instead of an add-on to existing Xbox hardware.
Second-order effects
- Sony faces pressure to match a budget/streaming tier in its own PlayStation roadmap, since Microsoft's cheapest box undercuts the traditional $-per-generation entry price.
- Game publishers gain a second distribution surface: if the streaming box sells at near-hardware cost, subscription reach — not unit sales of consoles — becomes the metric that determines where titles ship.
Third-order effects
- If the pattern holds through Lockhart and Keystone, Xbox hardware stratifies permanently into premium local-play machines and cheap cloud-access devices, with the service layer capturing the value.
- Console generations stop being monolithic platform resets: each cycle ships a family of devices at different price/performance points, all funneling into one subscription.
The trend: Xbox is moving from one-console-per-generation toward tiered hardware built to feed a cloud-and-subscription service, with the cheapest device doing the customer acquisition.