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How Xbox 'Scarlett' and 'XCloud' game streaming aim to expand Microsoft's reach

Revealed originally by our Senior Editor Zac Bowden last year, Microsoft's next Xbox product lineup is codenamed "Scarlett" internally, and thanks to some new reports, we now have more details on what format the next Xbox is going to take.

Reportedly aiming for 2020, Microsoft will reportedly launch two separate Xbox consoles. One is set to be more traditional, local hardware designed to compete in the power game with Sony's expected PlayStation 5 and gaming PCs, whereas the second console is reported to be a smaller, cheaper hybridized box, built with cloud streaming in mind.

Here are a few things we've learned from our own sources.

Xbox Scarlett and a hybrid cloud solution

Phil Spencer reveals Xbox cloud streaming at E3 2018.

Phil Spencer reveals Xbox cloud streaming at E3 2018.

Many of Microsoft's primary competitors in this space are streaming raw gaming visual data from the cloud while uploading controller inputs from the user. The latency issues this create can be pretty intense, rendering games largely unplayable even on average internet speeds. These latency issues are the primary reason why this technology has never hit the mainstream, despite the promise of allowing gamers to play console-quality games on any device, wherever you have a decent internet connection. Microsoft's working codename for these features is "XCloud," as per a report from TheVerge.

Redmond is looking into a hybridized solution that would see latency-sensitive aspects of a game experienced locally.

There is clearly a market to be tapped here, as seen with Nintendo's portable Switch console, which has already seen a huge amount of traction bringing Xbox- and PC-staple core games like DOOM and Skyrim into the palms of gamers' hands. This solution, of course, requires dedicated hardware and developer support. What if a regular Xbox game could be streamed to any portable device?

According to plans we've seen previously and now corroborated by, Redmond is looking into a hybridized solution that would see latency-sensitive aspects of a game experienced locally, such as inputs and collision, while other parts, such as graphics-intensive aspects, would stream via the internet. This solution would eliminate controller input latency issues, while giving gamers access to compatible games in their Xbox library. Our sources have told us that early versions of the Scarlett XCloud units might feature full fiber-optic internet ports to help developers test and simulate different types of networking environments, while supporting Microsoft data centers.

On the path to billions of gamers

Microsoft's current mission with Xbox is to reach billions of gamers with its platforms and services. We've heard that Xbox platform projects that were seen as not moving towards this goal have been shelved, with the whole company pulling in that single direction. We've also been told investment in Windows PCs is increasing, with big improvements to the Windows 10 Xbox app in the pipeline.

With an improved offering on PC, a much cheaper Xbox console with cloud streaming, and the promise of "console-quality" mobile Xbox games, Microsoft may be very well positioned for the future.

Xbox Scarlett: Everything we know about Microsoft's next gaming console

Jez Corden is a Senior Editor for Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

  • I love you Jez. I should've read the whole article. You are the man
  • Xbox Portable with UWP apps, backwards compatibility games and cloud streaming
  • It would be cool if Scarlett was a way to allow current Xbox Ones a way to play next gen games. Would eliminate the issue of low install base at the start of next gen.
  • i imagine the cloud service will be available for the current Xbox One consoles too.
  • This will be interesting. I can only assume that the streaming box will require a Gold subscription and/or game pass. Also assume Sony will do a similar thing which would require their PS Now... The thing that worries me though is people that have a physical library... Will there be a BR drive? Even if it's available as an external add-on, I think it's something that needs to be available in one way or another on all renditions. I'm all for digital, don't get me wrong, but with the popularity and huge kudos xbox has received over BC. Just being able to throw your old discs in...
  • No doubt disc reader will be obsolete, but MS can offer it as an option. It's Windows, plug a 3rd party reader and Windows 10 will grab the driver by itself.
  • If I'm reading Jez and right. Physical library would probably be for the 'console' version of Scarlett (the PS5 competitor) rather than the hybrid streaming box version. The streaming box would be for digital libraries and games. To keep manufacturing costs and retail price down, they would not have a physical drive or all the components to play a physical game (even with an attached drive)
  • I feel like the online gaming device would need some kind of powerful RAM in order to create a buffer to limit latency issues.
  • 4GB should be sufficient.
  • I suppose if you have a physical library this streaming device would not be for you as I would expect it would not have a disc player. To carry over a library of discs would probably require the full console (similar to how consoles work today) but, that would only give you access to play probably not access to stream those disc versions. Of course, their is no reason that the full console would not be able to access the streaming service if that is what you wish to do. The sad thing is that the original plan for the Xbox One would have tied your account to the actual disc. The original plan you would never had needed to ever access that disc again once you tied it to your account, Once tied to your account Microsoft gave you rights to a digital copy. This would have allowed you to use the digital copy instead (just like digital is used today). Which means if this streaming service requires you to have access to digital game ownership it would have worked out great for a disc owner in this situation. Sadly, people complaining about the online check to verify you still owned the rights to that disc (hadn't sold the disc - invalidating ownership or traded it) "forced" Microsoft to do a 180 of this feature set and removed it all before the console was released. What is worst it also removed the Friends/Family sharing option I was excited about. I think Sony has a different mindset on this. They had PSNow on other devices (Sony SmartTVs, discplayers, PS3, etc..) and removed them for no technological reason only for fear of protecting their current console. Would they essentially be willing to revert PSNow back and allow it on other devices beyond what will be newest console, the PS5? (that would mean allowing PS5 games to be streamed on PS4, PS3 machines? Tha tis the question will they limit the PS4 (that can access PSNow today) and not give it access to PS5 games. Will Sony be worried about marketing value of the PS5? As for Microsoft I see no fear on their part of getting new console games streamed everywhere. Of course depending on the device they may downgraded versions but playable. I suspect Microsoft will provide current Xbox One users access to their next console games via streaming if they so wished - no technological reason not to - so will Sony allow this as well?) Sony is more about controlling a locked down console experience. Microsoft seems more willing to not be all about one device. I could be wrong about Sony. I hope I am. But, PSNow would also probably require a major overhaul of how the services works. Does Sony have something that can overcome it's current issues that Microsoft is rumored to have overcome? PSNow is still a service that is erratic with how well it works. My fiber connection (900+Mbps) has issues, my friends 50Mbps works without any issues. However, even if all is well with connections issues games are still locked at 720p, max 30fps, have clear loss in fidelity, the service does not run games with lots of screen action, and there is lack of PS4 games (especially - for some reason - first-party games) etc... But, the major issue is scalability. PSNow is not virtualized (at least not with PS3 games) so it cannot be scaled easily. It takes adding more hardware every time you want to run more systems. All the PS3 games are still actual hardware, stacked PS3 motherboards (I believe it is 3 to a motherboard) in a warehouse. Not exactly the most salable solution. Sony overall (not just PSNow) is definitely not setup with the infrastructure to do anything even remotely close to what Microsoft is capable of doing with the cloud. Especially doing so on a worldwide level.
  • Another service competing for my limited allowable data plan. Not sure how this will work, 4K video, music, and now games all blow through the data plan. Something has to give. No way I can afford $130+for home internet and well over $130 for a cell plan for my family.
  • if data plan is a concern, i think the full console next generation Xbox may be better suited for you vs getting the streaming option.
  • Tell me more about the big updates for the Xbox App on Windows
  • All I actually care about is the ability to stream games from my console to another device via internet. I want that with this generation though, I don't want to have to buy a new console just for that feature.