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Microsoft

Platform(s): PC, Xbox, Xbox 360, Xbox One, Xbox Series S, Xbox Series X
Genre: Hardware
Developer: Microsoft
Release Date: Nov. 10, 2020

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Xbox FTC Leak - Mid-Gen Refresh, Next Gen Xbox, and the Future of Xbox Gaming

by Adam Pavlacka on Sept. 19, 2023 @ 12:30 p.m. PDT

Xbox Series X is Microsoft's fastest, most powerful console ever and set a new bar for performance, speed and compatibility, allowing you to bring your gaming legacy, thousands of games from three generations and more forward with you.

Last May, Microsoft's senior leadership team sat down for a biannual strategy review to discuss the future of Xbox. Among the participants were Sarah Bond, Satya Nadella and Phil Spencer.

The goal of the meeting was to start planning for the next generation of Xbox consoles (targeted for release in 2029), review the mid-gen Xbox Series refresh, and the future of the gaming business at Microsoft. Reviewing the presentation and notes from that meeting (and other meetings that have occurred) gives us an unprecedented peek behind the curtain. It's an unvarnished view of how Microsoft leadership views the gaming industry and where they think it is going.

One big caveat to all of this information is that it is from a snapshot in time. Although we are seeing it now due to court filings from the FTC v. Microsoft case, the content is more than a year old. While the broad strokes are likely still correct, it is always possible that specifics may have changed.

The strategy review meeting kicked off with a discussion of Fortnite on xCloud and the immediate success that Microsoft and Epic had with the launch. Within four hours of launch, 100k players were playing Fortnite on xCloud, and 74% of them were positive toward the service.

Microsoft covered all of the streaming costs for Fortnite on xCloud, but it was taking a 12-point margin on sales. Assuming a 15% conversion rate — what Microsoft sees with console players — that meant Microsoft was breaking even on Fortnite's streaming costs.


According to Sarah Bond, Fortnite on xCloud was about learning for Microsoft.


Converting those numbers to dollars, Tim Stuart said that breakeven was approximately $0.40 of revenue per hour. The goal was to halve that cost by the end of 2025.

One likely reason the discussion started with xCloud is because Microsoft really does see the cloud as the future of gaming. It's not just a marketing point. Based on the information provided in the review decks, the next generation of gaming relies on "transcending the console generation." Microsoft wants you to be able to play anywhere, anytime.


To make this vision a reality, the next generation of console is being described internally as a hybrid game platform. Whereas the current Xbox Series consoles are primarily console experiences first, with cloud streaming added on as a feature, Microsoft wants the next generation of Xbox hardware to be designed with the cloud in mind.

A decision that hadn't yet been made last year (though is likely confirmed at this point) is what CPU architecture to use: ARM64 vs. x64. The current Xbox Series consoles (and the planned mid-gen refresh) use x64 CPUs, just like PCs. Staying with an x64 CPU would likely make backward compatibility easier, but x64 CPUs generally take more power and run hotter than ARM64 CPUs.

So what is an ARM64 CPU? If you have a modern cell phone, chances are you already have an ARM64 device in your pocket. Other devices that use ARM64 CPUs are the Microsoft HoloLens 2 and IoT devices like the Raspberry Pi 4. ARM64 CPUs also power laptops that run Windows 10 and 11. These Windows devices run x64 programs via emulation. If you are a Mac user, the M-series laptops and desktops are ARM64, as are the A-series CPUs powering the iPhone.


Ultimately, the technical choice is likely going to end up being based on hardware considerations more than software. That includes power and performance considerations, as well as manufacturing considerations. Component shortages severely limited Microsoft's ability to sell Xbox Series consoles in the two years after launch, so if moving to ARM64 could guarantee hardware supply, that would be a strong point in its favor.

Including a GPU design based on AMD IP makes sense from both a technical and business perspective. Nvidia may be the current leader when it comes to GPUs and GPU performance, but AMD isn't far behind. With the demand for Nvidia GPUs limiting supply, using AMD could likely guarantee units for Microsoft. If the future Xbox hardware also does double duty as a machine learning or AI blade when not being used to power xCloud game streaming, that could help Microsoft bring down the overall cost of xCloud data centers even further.

The mention of a Thin OS, or lack thereof, on a $100 device and handheld devices implies that Microsoft is planning those devices to only support streaming and not have any local play. Depending on how the hardware market shapes up over the next few years, the $100 streaming box may never materialize. We're already seeing manufacturers like Samsung implement xCloud as a standard client in monitors and TVs. If that becomes more common, the market for such a box may disappear before it is developed.

Interestingly enough, Sony appears to have beaten Microsoft to the punch with a handheld streaming device, though the PlayStation Portal only streams from a local PlayStation 5. If Microsoft were to release a handheld device, it would likely support xCloud.

With all of that said, don't expect a next-generation Xbox anytime soon. Although plans can always change, Microsoft's timeline from last year has the next-generation Xbox launching at the end of 2028/beginning of 2029.



We're currently near the end of 2023, so if this timeline holds, Microsoft should have already made the ARM64 vs. x64 decision and started early hardware designs.

In addition to the early details around the next-generation Xbox, Microsoft's leadership team was also briefed on the mid-generation refresh plans for Xbox hardware.

Planned for release in the latter half of 2024, the mid-gen refresh includes a new controller and updated (but not more powerful) versions of the Xbox Series S and Series X.

The new revision of the Xbox controller, code named "Sebile," looks like it is planned to become the new standard controller. One of the big additions is direct-to-cloud support. This was the primary feature behind Google's Stadia controller. If Sebile can connect directly to xCloud for control inputs while having the display streamed, it could further reduce input lag on streaming titles. Other notable revisions include an updated Xbox wireless connection, Bluetooth 5.2, and an accelerometer.


Based on the presentation deck, Sebile is planned to launch at the end of May 2024, with a MSRP of $69.99. The updated Xbox Series S and Series X consoles were supposed to be announced in early June 2024.

The updated Xbox Series S console looks a lot like the existing Series S, but it swaps the USB-A port on the front of the console for a USB-C port. Other changes include a revised motherboard with a low-power standby, support for Wi-Fi 6E, Bluetooth 5.2, and 1TB of storage as standard.


The updated Xbox Series S is planned to launch at the end of August 2024 for $299. For gamers who are on a budget, Microsoft plans to clearance the current 512GB Series S console with a $199 Black Friday offer next year.

The updated Xbox Series X console is much more of a change. It incorporates many of the same updates as the Series S, with a revised motherboard, lower power consumption, and better connectivity. The Series X also bumps up the default storage to 2TB.

If those were the only changes, it wouldn't be a big deal, but the slide from last year's presentation also shows a redesigned case that looks like a vertical cylinder. That case redesign also means the loss of the 4K Blu-ray UHD disc drive.


For gamers who have gone entirely digital, that's not a big deal. The Xbox ecosystem handles digital games extremely well. But for those who prefer physical game collecting, this is a pretty big miss. Remember, there are some backward compatible games that are physical only, and some discs are no longer being made.

Adding better Wi-Fi and more storage at the cost of the disc drive may not be ideal for everyone. If you fall into that latter category, keep an eye out for holiday sales on the current Xbox Series X. You'll want to secure a unit with a disc drive.

The updated Xbox Series X is planned to launch at the end of October 2024 for $499.

Finally, there was discussion around making personalized consoles available via the Xbox Design Lab. While very intriguing, this was also highlighted as one of the open items due to it not being funded. It doesn't hurt to think about what crazy designs we might be able to come up with if the opportunity were available.

While all of this information is exciting, there's one important reminder. All of this information was current as of last summer, but a year is a long time, and plans can change. All of the timelines may be outdated by now; they could be delayed, or they could have moved up. The same is true of specific features and pricing.

Microsoft wasn't planning for this information to be made publicly available, but now that it's out in the wild, it's very possible that the company will shift gears and address it.

EDITOR'S NOTE: All of the information in this article is based on filings made with the court as part of the FTC v. Microsoft trial earlier this year. All documents filed with the court that are not under seal are public record. You can find the original FTC v. Microsoft trial documents on the court website.


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