First, Microsoft is building a traditional console that you would expect from the Xbox brand. I think it’s important to point this out so that those who prefer to have all their hardware locally, will have an option with the next generation Xbox.

As for specs for this device, that’s still not known at this time as it’s the early days of development for that piece of hardware. But what I am starting to hear more about is the second device, a streaming box that is designed to work with the company’s upcoming game streaming platform.

Scarlett Cloud as one person called it, is the game streaming service that we have all been envisioning ever since Microsoft showed off a demo game streaming at its all-employee meeting back in 2013. But this time, Microsoft has a path to bring it to market.

The second ‘console’ that the company is working on is a lower-powered device that is currently planned to ship with the next generation device that is designed for game-streaming. But the catch here is that Microsoft thinks it has figured out how to handle the latency sensitive aspects of gaming.

The cloud console will have a limited amount of compute locally for specific tasks like controller input, image processing, and importantly, collision detection. The downside of this is that it since more hardware is needed locally, it will raise the price of the streaming box but it will still cost significantly less than what we are accustomed to paying for a new-generation console which should help expand the platform’s reach.