Microsoft's next generation of consoles may once again present users with a choice of hardware, but in a different way than the Xbox One S and Xbox One X do right now. According to a Thurrott report, Microsoft is prepping a traditional console and a streaming-only console, both for launch in 2020.
The two systems are reportedly being developed under the name Scarlett, which would refer to "a family of devices." The streaming device, referred to in the article as Scarlett Cloud, would be less expensive and less powerful. However, in order to tackle issues of latency that have impacted previous streaming game services, Microsoft has developed a streaming technique that would see Scarlett Cloud handle controller input, image processing and collision detection locally. The hardware required would likely make the device more expensive than media streaming solutions like Chromecast or Roku, but still cheaper than a standard console.
As for which games run on which hardware, Thurrott reports that all Scarlett games would be fully compatible with both the traditional console and the cloud version. Additionally, Scarlett Cloud is said to be further along in development than the traditional console.
Microsoft announced the formation of its Cloud Gaming division earlier this year, and Xbox head Phil Spencer confirmed that the company was working on a game streaming service during the Xbox E3 2018 media briefing.