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Microsoft's Plans for Its Next-Gen Xboxes Come Into Focus

Microsoft plans to sell two next-gen consoles that will be priced at $299 and, reportedly, $499.

As has been rumored, Microsoft  (MSFT)  plans to sell two next-generation Xboxes this holiday season.

Following a series of leaks over the long weekend that removed any remaining suspense, Microsoft confirmed that its next-gen game-console lineup will include a small $299 system known as the Xbox Series S. 

Unlike the previously announced Xbox Series X, the Series S will lack an optical drive and instead rely only on a solid-state drive for storage.

Separately, Windows Central reports that the Series X will sell for $499, and that both the Series X and Series S will launch on Nov. 10. The Series X's reported price is on par with what the Xbox One and Xbox One X sold for when they respectively launched in 2013 and 2017.

The Series S was codenamed Lockhart and is believed to have a less powerful GPU than the Series X.  Though the full specs for the Series S haven’t been unveiled yet, a leaked commercial indicates that the console will support 1440p-resolution gaming and contain a 512GB SSD. 

For comparison, the Series X supports 4K-resolution gaming - it technically also supports 8K gaming, if one has an 8K TV on hand - and a 1TB SSD.

A leaked commercial for Microsoft's upcoming Xbox Series S.

Like its more powerful sibling, the Series S will support real-time ray tracing, a computationally demanding technology that can enable photorealistic game visuals, as well as 4K media streaming. And both consoles are expected to eventually support Microsoft’s cloud gaming service.

The service, previously codenamed Project xCloud, formally launches on Sept. 15 as a feature for Microsoft’s $14.99-per-month Xbox Game Pass Ultimate service. The cloud-gaming services is promised to support 22 markets and more than 100 games at launch time, but will initially run only on Android devices.

The Series S reveal comes three months after Sony undefined said it would sell a Digital Edition of its PlayStation 5 console that lacks an optical drive. But unlike the Xbox Series S, the PS5 Digital Edition’s specs and form factor are generally similar to those of the standard PS5 outside of its storage options.

The next-gen console launches from Microsoft and Sony will take place at a time when gaming activity and spending have both spiked thanks to covid-19. 

Last month, research firm NPD estimated that total U.S. spending on videogame products, services and content rose 34% annually in July to $3.25 billion. That increase left year-to-date spending up 21% to $23 billion.

Sony has reportedly significantly upped its 2020 PS5 production plans. Microsoft, for its part, has discontinued production for two of its Xbox One models - the Xbox One X and the Xbox One S All-Digital Edition. The move comes as it gets set to launch the One X. For now, the company is still selling the $299 Xbox One S.

As is the case for the Xbox One and PlayStation 4, AMD  (AMD)  is the processor supplier for Microsoft and Sony’s next-gen consoles. The systems will each rely on an AMD system-on-chip that features a graphics-processing unit and an 8-core central processing unit. 

Western Digital  (WDC)  is expected to be an solid-state-drive supplier, and Micron  (MU)  is expected to be a DRAM chip supplier.