Leaked Microsoft document hints at a cheaper and less powerful Xbox console, designed to provide key improvements in Xbox Series X at a lower price point
The document mentions multiple Project Scarlett consoles — Microsoft has been planning a second, cheaper and less power next-gen Xbox console.
Context & Ripple Effects
This leak closes a loop Microsoft has left open since 2018, when sources reported two new Xbox consoles in development, including a lower-powered streaming box tied to what became its game streaming service. Kotaku's December report of a disc-free budget SKU codenamed Lockhart was followed by the official Series X naming and holiday 2020 window — with no word on the second box.
The leaked document now puts the two-tier plan back on the record: a cheaper, less powerful Project Scarlett sibling meant to carry key Series X improvements at a lower price. The payoff came months later when Microsoft confirmed it as the $299 Xbox Series S — evidence the tiered strategy survived internal debate.
First-order effects
- Microsoft launches its next generation as a two-price lineup — Series X at the top and a budget digital SKU beneath it — rather than a single flagship, forcing buyers to choose between power and price at launch.
- Developers targeting Xbox must build against a lower-spec baseline console, making the budget box's capabilities a real constraint on next-gen games rather than an afterthought.
Second-order effects
- Sony faces a rival whose entry price undercuts whatever a single-SKU PlayStation 5 can cost, pressuring its own launch pricing and bundle strategy.
- A disc-free budget console funnels more Xbox owners toward digital storefronts and subscription services, strengthening the Game Pass and cloud-streaming ecosystem Microsoft has been building since the Scarlett Cloud concept first surfaced.
Third-order effects
- If the pattern holds, console generations stop being one-box-per-cycle and split into performance tiers — like phones or GPUs — letting Microsoft hit multiple price points each cycle instead of waiting for mid-generation refreshes.
- Shipping a flagship without a disc drive normalizes digital-only hardware, accelerating the shift away from physical media across the industry and raising questions about resale and library ownership.
The trend: Console makers are moving from one flagship per generation to tiered lineups paired with subscription ecosystems, trading disc drives and peak power for lower entry prices.