Microsoft unveils plans for new Xbox

Silhouettes of attendees are seen during the Microsoft Corp. Xbox event
Patrick T. Fallon | Bloomberg | Getty Images
Silhouettes of attendees are seen during the Microsoft Corp. Xbox event

Microsoft is ready to move the Xbox to the next generation.

The company on Monday unveiled a new Xbox One system — code named Project Scorpio — that retains many of the features of the current generation and will play all existing games, but greatly enhances the hardware power, enabling true 4K gaming and better support for virtual reality.

"We believe it will be the most powerful console ever built," said Phil Spencer, head of Microsoft's Xbox division. "This is hardware built specifically to lead the gaming industry into true 4K gaming. … We're announcing it today to give our developers and partners the ability to take advantage of the capabilities now in order to deliver ... more great games."

Set to release during the holiday 2017 season, Scorpio will be fully compatible with all existing and future Xbox One titles.

Spencer may not have called Scorpio a "next generation" system, but analysts say that was only because of the changing nature of how video game consoles will work moving forward.

"The traditional console cycle is dead," said P.J. McNealy, CEO and Founder, Digital World Research. "Microsoft is now developing the Xbox in lockstep with Windows 10, which has been a longtime corporate goal."

Project Scorpio shouldn't be confused with the Xbox One S, a new system that will come out this holiday. That revision of the Xbox One will offer a stronger graphical processing unit and smaller form factor, and will enable 4K streaming, but is still inferior to the few specs Microsoft unveiled about Scorpio.

The upcoming system will offer eight CPU cores and six teraflops of GPU power. Beyond 4K gaming with greatly enhanced graphics, it will allow Xbox to be fully in the running as virtual reality becomes a stronger force in the gaming world.

"We're moving Fallout 4 to virtual reality," said Bethesda's Todd Howard. "And to have a console that can support that, I think it's going to be magical."

News of Microsoft's Project Scorpio comes just days after Sony confirmed the long-rumored more powerful PlayStation 4, code named "Neo." That system will similarly focus on 4K video output and offer more powerful internal components. Sony did not announce a launch date for its new system.

"They're timing this pretty well with the rising tide of 4K TVs," says McNealy. "The new [Xbox One S] enables 4K streaming but not true 4K gaming, but there really isn't true 4K gaming yet. But by holiday 2017, you'll see plenty of true 4K games, which should look spectacular."