Microsoft has been trying to keep their software and tech updated for their Xbox consoles and it only makes sense that they are making one right now to replace the current Xbox console. Since its initial release in 2013, it has been 5 years and it is also approaching its final phase of its life cycle like the PlayStation 4. However, word has it that the next generation Microsoft console, code-named Scarlett, will have a smoother streaming feature which is due out in 2020.
They even mentioned it on E3 as well from 2:36:00 onwards:
With streaming as the main focus in the current generation, Microsoft is developing a cloud-based streaming device that is lower-powered which comes with the console. As the device was claimed “lower-powered”, it will have a limited amount of compute on specific tasks like controller input, image processing and collision detection. Code-named Scarlett Cloud, will come with the console – another device included which could translate to a higher cost. But it was said that it will not cause a raise in price of the console. Instead, it will cost “significantly less” than a new console would cost.
Because it is cloud-based, everyone around the globe with data centers in every major market will be able to stream the games platform. It is also likely that it can run on any type of device. However, there’s the case of latency as it is dependent on how well your connection is with the cloud server. According to thurrott, a person familiar with Microsoft’s plans claims that the Scarlett may reduce latency in all aspects of the game. It was said that if a multiplayer game is using Azure as its central server, the Scarlett Cloud console will be closer physically to the multiplayer server which results in less latency.
Currently, the Scarlett Cloud is still in its development cycle which is expected to be released with the next-gen console in 2020.